Bed Bath & Beyond Stays Afloat With $1B Investment

As Bed Bath & Beyond fights to keep its doors open, the retailer has struck a $1B deal with investors to avoid bankruptcy, at least for now. 

The big-box retailer secured a financing package from investors, the largest being hedge fund Hudson Bay Capital Management, The Wall Street Journal reported. The deal will allow investors to convert their securities into company shares at a discount.

To some analysts, the deal serves as only a temporary cushion as the company continues to fall.

“We estimate that the additional capital provides the company with just a few more quarters of room to turn around its operations,” Seth Basham of Wedbush Securities said in a research report, according to the WSJ.

Basham also described the move as a "last gasp" and said he sees the stock as worth nothing. 

In a securities filing Monday, the retailer said it expects to see sales decline another 30% to 40% in the first fiscal quarter before finances begin to balance out, which it predicts won't be until March. The company also cited optimism that the back-to-college shopping season, typically starting in late summer, can help it return to normal levels.

At the end of August, Bed Bath & Beyond announced plans to close 150 underperforming locations and slash 20% of its workforce in an effort to stabilize its finances. It still expects to close the locations even with the new capital, the WSJ reported. 

The company has since been teetering on the edge of bankruptcy as its missed interest payments to its bondholders and had its credit lines frozen due to breaches in debt agreements.

If Bed Bath & Beyond's newfound investment isn't enough, the company's shutdown would mark one of the biggest hits to the industry.

The retailer leased 27.9M SF across 953 locations in the U.S. and Canada as of last summer. That would make a potential bankruptcy larger than that of similar retailers like Toys R Us, which had 700 stores in 2018, and Sports Authority, which had 465 locations before its downfall in 2016.

All may not be lost for landlords, though, as they are reportedly already seeing interest from other big retailers, including Trader Joe's, T.J. Maxx and Sephora, ready to snatch up real estate left behind by Bed Bath & Beyond.