Bed Bath & Beyond gets $120 million lifeline to help it stock near-empty shelves
The company is close to bankruptcy and this $120 million will help it restock its shelves.
New York CNN
Bed, Bath & Beyond, a cash-strapped company that is trying to avoid bankruptcy, has announced a $120-million lifeline in order to stock its nearly empty shelves.
The company's inability to purchase inventory to stock shelves is one of the reasons why sales and losses are on the rise.
In a January statement, CEO Sue Gove stated that despite her efforts to quickly and effectively change the assortment, merchandising, and marketing strategies, there was a shortage of inventory and she did not reach her goals.
The $120 million financial assistance is designed specifically to help stock the shelves at those locations that are scheduled to close and to attract shoppers to other sales than the "store closing" sales.
ReStore Capital will buy up to $120 Million of products from Bed, Bath & Beyond suppliers to replenish stock at Bed, Bath & Beyond, and buybuy BABY.
Gove said in a statement on Wednesday that the agreement "allows us to improve our customer experience and increase our inventory positions for top-selling items." This... solution will allow us to increase merchandise availability and better meet demand.
Suppliers who are worried about bankruptcy will not sell inventory to retailers without payment in advance. They don't wish to be unsecured creditors if a bankruptcy is filed. It is difficult for retailers to get out of a downward cycle when they are competing with rivals who do not have to pay up front.
Gove stated in her statement that the support from our top suppliers shows our brands' staying power and our ability to improve sustainably. We know that the current performance and value is not indicative of our potential.
ReStore Capital's financial support may not be enough to keep the company out of bankruptcy. In a filing last week, the company revealed plans to raise cash by selling $300 million of its stock. The company said that if it didn't sell the $300 million worth of stock, they would be forced to file for bankruptcy.
Despite the cash injection on Wednesday, the company has not said that it will reduce its stock sale plans or say it no longer faces bankruptcy. The proceeds from the sale of stock would provide the cash that the company needs to pay off debts that it can't afford. However, the help it receives from ReStore Capital would only give it additional inventory that is much needed.
In an effort to curb the company's escalating losses, 400 of the approximately 760 remaining stores are in the process closing.