Bed Bath & Beyond shares spike as retailer reportedly secures financing deal
The domestic goods retailer will offer an update on efforts to strengthen its balance sheet at the end of the month
Shares of Bed Bath & Beyond rallied Wednesday, jumping as much as 36%, following a report the domestic goods retailer has secured a lender to provide financing.
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Sources told The Wall Street Journal the company chose a lender following a marketing process conducted by JPMorgan Chase. The size and structure of the loan deal is not immediately clear. The retailer has been seeking about $375 million to help pay down existing debt and strengthen its liquidity, according to the Journal.
A JPMorgan spokesperson declined to comment. A representative for Bed Bath & Beyond did not immediately return FOX Business' request for comment.
STOCK MARKET NEWS: BED BATH & BEYOND SOARS, DURABLE GOODS MIXED, OIL SPIKES
The lifeline comes as Bed Bath & Beyond has recently seen volatile swings in its stock. Though the stock remains popular among retail investors, it took a hit last week after Chewy.com co-founder and GameStop chair Ryan Cohen's RC Ventures dumped its 11.8% stake in the company.
Bed Bath & Beyond
Cohen, who acquired the stake in March, said at the time that Bed Bath & Beyond was "struggling to reverse sustained market share losses, stem years-long share price declines and navigate supply chain volatility."
He called on the company to "narrow its focus to fortify operations and maintain the right inventory mix to meet demand, while simultaneously exploring strategic alternatives that include separating buybuy Baby, Inc and a full sale of the company." In addition, he expressed concern about the compensation of Bed Bath & Beyond's leadership, including former CEO Mark Tritton, "relative to performance and its strategy for reigniting meaningful growth."
Bloomberg recently reported that some Bed Bath & Beyond suppliers have halted product shipments due to unpaid bills and several firms that provide short-term financing and credit insurance have revoked coverage of the retailer. Some analysts have also accused Bed Bath & Beyond of turning down air conditioning in its stores to save money.
Moody's downgraded the company's credit rating in July and S&P followed in August.
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Since March, Bed Bath & Beyond has added three new independent directors to its board and committed to explore strategic alternatives for the company’s buybuy Baby business. It has also replaced Tritton with interim CEO Sue Gove and discontinued Wild Sage, a private brand of bedding, decor and furniture launched in June 2021.
Last week, Bed Bath & Beyond said it has been "working expeditiously" over the past several weeks with external financial advisers and lenders to bolster its balance sheet. In addition, Bed Bath & Beyond said in June it had retained Berkeley Research Group (BRG), a leading retail advisory firm, to focus on "cash, inventory and balance sheet optimization."
In the fiscal first quarter of 2022, Bed Bath & Beyond saw its total net sales fall 25% and comparable sales drop 23% compared to the same period last year amid soaring inflation, a rapid shift in consumer spending patterns and declining demand in its Home sector. Bed Bath & Beyond ended the quarter with $107.5 million in cash, down from $1.1 billion a year earlier.
Bed Bath & Beyond plans to provide an update on efforts to strengthen its balance sheet at the end of the month.