As Bed Bath & Beyond Faces Bankruptcy, It Receives $120 Million In Merchandise Lifelines

In a recent announcement made Wednesday, Bed Bath & Beyond announced they are working with Hilco Global for the purpose of getting merchandise back on their shelves, the latest move in its efforts to avoid going bankrupt. 

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ReStore Capital, an investment manager under Hilco has entered into an agreement with the home goods retailer to offer its customer's vendor consignment program as part of its "creative financing solutions" initiative. 

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This agreement provides ReStore Capital with the ability to purchase up to $120 million worth of prearranged merchandise from Bed Bath & Beyond's key suppliers, on a revolving basis at any given time, in order to boost inventory levels at both. 

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In the past, Bed Bath has reported that its vendors have tightened their credit terms, cut credit limits, and required prepayments before they would allow the company to fulfill orders before they would fulfill orders, which has left the company lacking in inventory. 

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As the CEO of Bed Bath & Beyond said, "Sue Gove will continue to strive to overcome Bed Bath's operational and financial obstacles with relentless determination."

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It has been our objective to increase our inventory position in the top-selling items that our customers are purchasing by launching a vendor consignment program. In a news release, Gove said in a statement that “this capital-light solution can help us to increase merchandise availability and fulfill demand better.” 

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"Our focus is on sustaining our business as quickly as possible, unlocking our true value over the long-term, and ensuring the success of all stakeholders."

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The CEO of Bed Bath and Beyond noted that the company has seen support from its top suppliers, and said that this shows Bed Bath and Beyond is "potentially capable of sustainable improvement." 

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It is important for us to recognize that one of our greatest strengths is our ability to improve. Therefore, every member of our organization strives to expand and accelerate the improvement of our business. 

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A series of dismal quarters has caused Bed Bath to go into the red and has depleted its cash flow, which in turn has pushed the company into bankruptcy court. Bed Bath has done everything in its power to avoid bankruptcy court. 

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Last week, the company announced its preliminary results for the fourth quarter of its fiscal year. It announced that net sales were about $1.2 billion and comparable-store sales declined by about 40% or 50%. Even though Bed Bath reported negative operating losses continued, it noted that free cash flow had not been depleted.

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According to the company's fiscal fourth-quarter 2021 results, revenue for the company was $2.05 billion.

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A month ago, the company announced what was believed to be a Hail Mary stock offering, which was anticipated to bring in more than $1 billion in equity into the company but, for whatever reasons, the company was only able to raise $360 million through the offering, the company said. 

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There has been another stock offering by Bed Bath & Beyond for $300 million, which was announced on March 30. In the event that this offering fails to work out, Bed Bath & Beyond could file for bankruptcy protection.

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There is a concern that these two offerings have diluted the share price of Bed Bath and Beyond, which has been falling steadily in recent months and has hindered its fundraising efforts. Its shares are currently trading around 35 cents, and the company's market value is $151.5 million, at the close of Tuesday.

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