bed bath and beyond has been in talks with prospective buyers and lenders as he works to keep his business afloat during 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 who will keep the doors open for its two main chains, its namesake brand and Buybuy Baby, said the people, who were not authorized to discuss the matter publicly.
At the same time, Bed Bath has also been looking for a lender to provide financing that would keep the company running if it filed for bankruptcy in the coming weeks, the people said.
A Bed Bath spokeswoman said on Wednesday that the company would not comment on specific relationships, but has been 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 thoroughly and in a timely manner,” the spokeswoman said, declining to comment further.
A representative for AlixPartners, which CNBC recently reported He was hired as a consultant to the companyHe declined to comment.
Earlier this month Bed Bath warned you may need to file for bankruptcy after its restructuring plans failed to substantially boost sales and repair its balance sheet. The company net reported losses that exceed $1,120 million during the first nine months of the fiscal year. It has lost its liquidity in recent months, taken on a large debt load and faced strained relations with its suppliers.
comparable sales decreased 32% year-over-year in the most recent fiscal quarter, it ended November 26. Company leaders said the company has had a harder time keeping shelves stocked as sellers change payment terms or decide not to ship merchandise due to the retailer’s financial challenges.
Last week, CNBC reported that Bed Bath had begun another round of layoffs in an attempt to further reduce costs. The company had about 32,000 employees as of February 2. 26, 2022, according to public documents.
The company has been working to find a route that allows its chains to survive, the people added. One day before Bed Bath issued a ‘going business’ warning, announced in a memo to employees that it had hired Shawn Hummell, a former Macy’s executive, to lead its namesake brand’s retail, store and merchandising operations as senior vice president of stores. Before working at Macy’s, Hummell worked for Abercrombie & Fitch, another retailer that underwent a sea change.
One potential buyer hovering around Bed Bath is private equity firm Sycamore Partners, according to people familiar with the discussions. Sycamore is especially interested in Buybuy Baby, the Bed Bath brand for babies and toddlers, which has outperformed the company overall. Buybuy Baby has been deemed more likely to survive into 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 such as women’s clothing chain Talbots, including struggling companies that have sought bankruptcy care like Ascena’s Ann Taylor. A spokesman for Sycamore Partners declined to comment. dealbook previously reported Sycamore’s interest in Buybuy Baby.
Bed Bath has also attracted interest from companies acquiring companies’ intellectual property or trademarks, particularly struggling ones, the people said. Authentic Brands, which has frequented many failed sales for retailers like Forever 21, has also been eyeing Bed Bath, the people said. A representative for Authentic Brands declined to comment.
Pending a sale, the company and its advisers have been seeking additional financing for a bankruptcy filing, which could occur in the coming weeks, the people said. The company’s advisers are seeking 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 has provided financing to other retailers including JC Penney and Designer Brands.
The Sixth Street facility could turn into bankruptcy financing, the people said, or the lender or others could turn their debt into equity and become the owner of the Bed Bath. A representative for Sixth Street declined to comment.
Bed Bath financing strategy emerges as retail partner party town sought Chapter 11 protection this week. Also heavily loaded with debt, Party City is looking to restructure its balance sheet and move forward with a smaller footprint.
Bankruptcy attorney Eric Snyder of the Wilk Auslander law firm said a sale was unrealistic for Bed Bath due to declining sales and inventory, as well as higher losses.
“They don’t have the availability to right the ship and they don’t have the cash to continue operating,” Snyder said. “I just don’t see any other option other than bankruptcy and liquidation.”
—CNBC melissa repko contributed to this report.
