Bed bath and beyond has been in talks with potential buyers and lenders as she works to keep her business afloat in a possible bankruptcy filing, according to people familiar with the matter.
The retailer is in the midst of a sale process in hopes of finding a buyer who would keep the doors open for its two major chains, its eponymous banner and Buybuy Baby, said the people, who were not authorized to discuss publicly about the issue.
At the same time, Bed Bath has also been looking for a lender to provide financing that would allow the business to continue if it were to file for bankruptcy in the coming weeks, the people said.
A Bed Bath spokeswoman said Wednesday the company was not commenting on specific relationships, but was working with strategic advisers to assess all avenues to regain market share and improve liquidity.
“Multiple avenues are being explored and we are determining our next steps in a thorough and timely manner,” the spokeswoman said, declining to comment further.
A representative for AlixPartners, who CNBC recently reported had been hired as an adviser to the company, declined to comment.
Earlier this month Bed Bath warned it may have to file for bankruptcy after its turnaround plans failed to significantly boost sales and repair its balance sheet. The company reported net losses exceeding $1.12 billion for the first nine months of the fiscal year. It has exhausted its cash in recent months, taken on heavy debt and had to deal with strained relations with its suppliers.
Comparable sales were down 32% year-over-year in the most recent fiscal quarter ended Nov. 17, 26. Company executives said the company had more difficulty supplying shelves, as sellers changed payment terms or decided not to ship goods due to the retailer’s financial difficulties.
Last week, CNBC reported that Bed Bath had begun another round of layoffs in an effort to further cut costs. The company had about 32,000 employees in February. 26, 2022, according to public filings.
The company has been scrambling to find a route that allows its chains to survive, the sources added. A day before Bed Bath issued a ‘going concern’ warning, it announced in a memo to employees that it had hired Shawn Hummell, a former Macy’s executive, to lead sales operations at the retail, store and merchandising of his eponymous brand as senior vice president of stores. Prior to his stint at Macy’s, Hummell worked for Abercrombie & Fitch, another retailer that has undergone a turnaround.
A possible buyer surrounding Bed Bath is private equity firm Sycamore Partners, according to people familiar with the discussions. Sycamore is particularly interested in Buybuy Baby, the Bed Bath banner for infants and toddlers, which outperformed the company as a whole. Buybuy Baby was deemed the most likely to survive in the future, the people said.
Still, a sale of Bed Bath as a whole remains on the table – albeit with a much smaller store footprint than it currently has, the people said.
Sycamore is known for acquiring retailers, like women’s clothing chain Talbots, including struggling companies that have sought bankruptcy attention like Ann Taylor of Ascena. A spokesperson for Sycamore Partners declined to comment. Dealbook previously reported Sycamore’s interest in Buybuy Baby.
Bed Bath has also attracted interest from companies acquiring the intellectual property or trademarks of companies, especially struggling ones, the people said. Authentic Brands, which has seen many bankrupt sales for retailers like Forever 21, also reviewed Bed Bath, the people said. A representative for Authentic Brands declined to comment.
Failing a sale, the company and its advisers have been seeking additional financing for a bankruptcy filing, which could take place in the coming weeks, the sources said. Advisors at the company are looking for a loan of at least $100 million, one of the people said.
Last year, Bed Bath received $375 million in new funding from lender Sixth Street Partners, which provided funding to other retailers like JC Penney and Designer Brands.
The Sixth Street facilities could be converted into bankruptcy financing, the people said, or the lender or others could convert their debt into equity and own Bed Bath. A representative for Sixth Street declined to comment.
Bed Bath’s Funding Strategy Looks Like Another Retailer party town filed for Chapter 11 protection this week. Still heavily indebted, Party City is looking to restructure its balance sheet and move forward with a smaller footprint.
Bankruptcy lawyer Eric Snyder of law firm Wilk Auslander said a sale was unrealistic for Bed Bath due to falling sales and inventory, as well as rising sales. losses.
“They don’t have the availability to right the ship, and they don’t have the money to keep operating,” Snyder said. “I just don’t see any other option but bankruptcy and liquidation.”
—CNBC Melissa Repko contributed to this report.