Bed Bath & Beyond seeks capital infusion, buyer ahead of possible bankruptcy

Bed Bath & Beyond It is in discussions with potential buyers and creditors as it works to keep the business afloat amid a possible bankruptcy filing, according to people familiar with the matter.

The retailer is in the middle of a sale process, hoping to find a buyer that would keep the doors open for both of its main chains, its namesake banner and Buybuy Baby, said the people, who were not authorized to discuss the matter publicly.

At the same time, Bed Bath was looking for a lender to provide financing to keep the company afloat if it files for bankruptcy protection in the coming weeks.

A Bed Bath spokeswoman said Wednesday the company does not comment on specific relationships, but is working with strategic advisors to evaluate all avenues to regain market share and increase liquidity.

“Many avenues are being explored and we are determining our next steps thoroughly and in a timely manner,” the spokesman said, declining to comment further.

A representative for AlixPartners, which CNBC said was recently hired as an adviser to the company, declined to comment.

Earlier this month, Bed Bath warned it would have to file for bankruptcy after its turnaround plans failed to significantly boost sales and repair its balance sheet. The company reported net losses of more than $1.12 billion in the first nine months of its fiscal year. It has lost liquidity in recent months, faced a heavy debt load and strained relations with its suppliers.

Comparable sales in the most recent fiscal quarter ended Nov. 26 fell 32% year over year. Company executives said the company has had a harder time keeping shelves stocked as vendors change payment terms or decide not to ship because of the retailer’s finances. difficulties.

Last week, CNBC reported that Bed Bath had begun another round of layoffs to further cut costs. As of February 26, 2022, the company had approximately 32,000 employees, according to public filings.

The company is working to find a route that sees its chain survive, the people added. A day before Bed Bath issued the “continuing concern” warning, it announced in an employee memo that it had hired former Macy’s executive Shawn Hummell as the namesake brand’s senior vice president of stores for retail, store operations and merchandising. Before working at Macy’s, Hummell worked at Abercrombie & Fitch, another retailer undergoing a turnaround.

One possible buyer circling Bed Bath is private equity firm Sycamore Partners, according to people familiar with the discussions. Sycamore is particularly interested in Buybuy Baby, a Bed Bath banner for babies and toddlers that outperforms the broader company. People believed that the Buybuy Baby had a high probability of survival going forward.

Still, a sale of Bed Bath as a whole remains on the table — albeit with a smaller store footprint than it currently has, the people said.

Women’s clothing chain Sycamore is known for acquiring retailers like Talbots, as well as Ascena’s bankruptcy-focused companies like Ann Taylor. A Sycamore Partners spokeswoman declined to comment. Dealbook previously reported Sycamore’s interest in Buybuy Baby.

Bed Bath has also attracted interest, particularly from companies acquiring intellectual property or brands from struggling companies, the people said. Authentic Brands, which has frequented many bankruptcy sales for retailers such as Forever 21, said it is also looking at Bed Bath. A representative for Authentic Brands did not immediately respond for comment.

Shortly after the sale, the company and its advisers sought additional financing for a bankruptcy filing that is expected to take place in the coming weeks. The company’s advisers are seeking at least $100 million in loans, one of the people said.

Last year, Bed Bath received $375 million in new funding from lender Sixth Street Partners, which has financed other retailers such as JC Penney and Designer Brands.

The Sixth Street facility could be turned into bankruptcy financing, the people said, with the lender or others turning debt into equity to own Bed Bath. A representative for Sixth Street did not immediately return a request for comment.

Bed Bath’s financing strategy comes as a retailer Party City filed for Chapter 11 protection this week. And with a huge debt load, Party City wants to rebalance and move forward with a smaller footprint.

Bankruptcy attorney Eric Snyder of the law firm Wilk Auslander said a sale is not realistic for Bed Bath because of declining sales and inventory, as well as widening losses.

“They don’t have the availability to right the ship and they don’t have the money to continue operating,” Snyder said. “I just don’t see any option other than bankruptcy and liquidation.”

– CNBC Melissa Repko contributed to this report.

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