Bed Bath & Beyond needs help with its debt and is looking to restructure, which could include new loans, refinancing existing loans, or both—and according to a Bloomberg report, it has brought on the law firm of Kirkland & Ellis, which specializes in restructuring, to do just that.
Bed Bath & Beyond currently has roughly $1.4 billion in long-term debt.
Despite a boom in the sales of home goods in the early stages of the pandemic, the company started losing sales toward the end of 2021, and that has continued into 2022. This decline can be chalked up to supply chain problems and now a consumer pullback from discretionary spending.
The company’s latest reported quarter saw a decline in sales of 25%, which equated to a $358 million net loss. It also fired its CEO, Mark Tritton, and was downgraded by Moody’s.
Bed Bath & Beyond seems to have made a mistake when, less than a year ago, it announced it was accelerating a $1 billion stock buyback, rather than using the cash to invest in its turnaround or pay down its balance sheet.
Ryan Cohen, the Chewy founder and GameStop chairman who took an activist stake in Bed Bath & Beyond early in 2022, has also been applying pressure to Bed Bath & Beyond for much of the year. In March, he criticized the company’s sputtering turnaround strategy and suggested it sell off its rapidly growing BuyBuy Baby business—or even the entire company.
RC Ventures, Cohen’s investment firm, recently signaled it intends to sell its entire stake in the company, and just days before that, it bought call options for more Bed Bath & Beyond stock.
Kirkland, meanwhile, has represented some of the largest retailers to go through Chapter 11 bankruptcies in recent years, including Neiman Marcus, Toys R Us, and J.C. Penney, and is often seen as the firm to hire by companies in trouble. But Kirkland doesn’t just cater to bankruptcies, such as when it assisted Macy’s with raising new debt capital to help it through the early part of the pandemic.
Bed Bath & Beyond at least appears to be taking a proactive approach to its financial woes, saying in a securities filing: “[W]e have been working expeditiously over the past several weeks with external financial advisors and lenders on strengthening our balance sheet, and the Company will provide more information in an update at the end of this month.”
