Bed Bath & Beyond Reportedly Plans Bankruptcy As Meme Stock Crashes Amid ‘Substantial Doubt’ Business Can Continue

Topline

Bed Bath & Beyond is reportedly preparing to file for bankruptcy in the coming weeks as the struggling brick-and-mortar retailer faces persistent economic challenges plaguing efforts to turn around its business—further piling on to abysmal losses for a stock that more than tripled amid retail-trading mayhem during the pandemic.

Key Facts

Bed Bath & Beyond is in the early stages of readying a chapter 11 bankruptcy filing that could come within weeks, the Wall Street Journal reported Thursday afternoon, citing people with knowledge of the matter and noting the bankruptcy filing is not a certainty.

The report comes after Bed Bath & Beyond shares crashed nearly 30% Thursday to $1.69—pushing shares down to lows last seen almost 30 years ago—after the firm warned recurring losses in its latest quarters have contributed to “substantial doubt about the company’s ability to continue.”

The retailer said it expects sales to collapse 33% to less than $1.3 billion in the latest quarter as a result of lower customer traffic and reduced levels of inventory, and it also stated it is exploring actions including restructuring, debt refinancing, selling assets and filing for bankruptcy relief.

“These measures may not be successful,” cautioned the firm, which expects to post a loss of about $385.8 million in its upcoming earnings report.

In a statement, CEO Sue Gove blamed “inventory constraints” and “economic challenges,” including reduced credit limits that barred the firm from purchasing more merchandise, for the worse-than-expected performance.

Key Background

As customers turned to online shopping, Bed Bath & Beyond, which has struggled to build a strong digital presence, became one of the worst-hit brick-and-mortar retailers of the past decade. However, shares of the firm began to surge early last year, at one point more than tripling as retail traders plowed into heavily shorted stocks. The frenzy cooled off but once again intensified when billionaire Ryan Cohen, who has led an as of yet unsuccessful bid to turn around fellow retailer GameStop, disclosed a $120 million investment in the home goods store. That fervor, too, was short-lived, with Cohen cashing out his stake in August.

Surprising Fact

Shares of Bed Bath & Beyond have collapsed 95% from a closing high of about $35 in January 2021. However, that pales in comparison to losses since the firm’s heyday in 2014, when shares peaked at more than $80. Fellow meme stock GameStop has collapsed about 80% since its peak nearly two years ago.

Further Reading

After 28% Drop In Revenue, Bed Bath & Beyond Stock Needs A Markdown (Forbes)

Bed Bath & Beyond Stock Skyrockets After Billionaire GameStop Chair Cohen Discloses $120 Million Investment (Forbes)