Bed Bath & Beyond warns on continuing as a ‘going concern’
NEW YORK (AP) — Struggling Bed Bath & Beyond warned on Thursday that there’s substantial doubt about the company’s ability to continue as a “going concern” even as the home goods retailer continues to study options like refinancing its debt or restructuring its business in bankruptcy court.
The outlook came after the company’s dismal sales continued through the holiday shopping season. Shares fell more than 18% on the news.
The company, based in Union, New Jersey said that it expects to report net sales of $1.26 billion for the third quarter ended Nov. 26. That would be a 32% drop from a year earlier. It also anticipates a net loss of roughly $385.8 million for the third quarter, compared to a loss of $276.4 million in the year-earlier period.
The chain said that its financial performance over the holiday season was hurt by inventory constraints and reduced credit limits that resulted in shortages of merchandise on the shelves.
In August, Bed Bath & Beyond announced it would shutter stores and lay off workers in a bid to turn around its beleaguered business. It closed about 150 of its namesakes stores and slashed its workforce by 20%. It estimated those cuts would save $250 million in the company’s current fiscal year. It also said it had lined up more than $500 million of new financing.
Mired in a prolonged sales slump, the company also announced back in August that it will revert to its original strategy of focusing on national brands, instead of pushing its own store labels.
That reversed a strategy embraced by its former CEO Mark Tritton, who was ousted last June after less than three years at the helm. It said it would get rid of one-third of its store brands, which had started to be rolled out in the last year or so.