Take our debt!
Struggling retailer Bed Bath & Beyond is disastrously short in a major debt exchange designed to give the company a much-needed financial breather. It has announced that it will extend the debt exchange offer from December 5th to December 19th.
According to data provided by retailers, this extension reflects limited willingness of debt holders in debt swaps (right column of chart below). Such limited appetite may reflect creditor concerns about Bed Bath & Beyond’s viability and its repayment should the company go bankrupt.
Throughout the year, the retailer battled slow sales, low store traffic, low cash levels, and products that customers didn’t like. Earlier this year, the board fired Mark Tritton, CEO of Bed Bath & Beyond’s turnaround. Other executives fled as cash-saving and cost-cutting efforts were underway.
What’s more, the company, which has slashed prices this holiday season to raise much-needed funding, is showing little signs of life under new CEO Sue Gove.
Same-store sales in the second quarter were down 26% year-over-year as the economic slowdown and poor inventory quality weighed on store traffic. The company posted his $168 million operating loss in the fourth quarter due to lower sales and increased discounting.
Bed Bath & Beyond’s stock fell 16% last month against a 4.5% gain in the S&P 500.
What hasn’t helped the Emotions and Debt Swap efforts is that Bed Bath & Beyond can be doing ugly things during the all-important holiday season.
Bed Bath & Beyond’s US web traffic dropped a staggering 19% in November, according to new research from Jefferies analyst Jonathan Matzzewski. The decline worsened from Thanksgiving to Cyber Monday, down about 25% year-over-year.
Matuszewski slashed Bed Bath & Beyond’s estimates.
“For the third quarter of the fiscal year, we have estimated comparable sales. [-23%] from [-15%] “Management indicated that the quarter-to-date trend through September was virtually unchanged from the second quarter, but as the second quarter progressed under continued pressure in November, it is now I think it’s weakened.”
Brian Sotzi general editor, Yahoo Finance anchorFollow Sozzi on Twitter @BrianSozzi and LinkedIn.
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