This article was originally published in The New York Times by Lauren Hirsch and Jordyn Holman
Jan. 5, 2023 | LINK
Bed Bath & Beyond Warns of Potential Bankruptcy
The home goods retailer said weak sales and slower foot traffic had forced it to consider options for restructuring. The retailer estimated that it would record a loss of $386 million in its latest quarter.
Bed Bath & Beyond, the beleaguered home goods retailer, warned investors on Thursday about rapidly darkening prospects for its future, saying that bankruptcy was a possible option and raising doubts that it could pull off an ambitious turnaround plan it put in place just months ago.
For a company in as much financial trouble as Bed Bath & Beyond, “it’s very difficult to raise new capital, but it’s also difficult to get your current capital providers to want to play ball for a longer period of time,” said James Gellert, the chief executive of the financial analytic firm RapidRatings International. That makes it “really hard for a company like them to claw out of the position that they’re currently in.”
Our ratings flagged the deterioration of Bed Bath & Beyond back in March 2018. Since then, the FHR has been a leading indicator in the company’s decline, staying true to the underlying fundamentals of the home-goods retailer even when their stock went up.
Bed Bath and Beyond is emblematic of every company that had their business fundamentals weakened in recent years but survived because of a greater access to liquidity and credit during the peak of COVID. Now that the credit cycle is coming to an end, Bed Bath and Beyond is just the tip of the iceberg. The home-goods retailer is a household name with public financials, making it an easy company to flag. The deeper you dive into small and private suppliers the more you see the same underlying dynamics happening up and down a supply chain—and most companies are blind to it.
RapidRatings is the only company that flags the financial health deterioration for both your public and private suppliers so you can stop supply chain disruptions before they happen.
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