bed Bath and Beyond It has been in discussions with potential buyers and lenders as it works to keep its business afloat during a possible bankruptcy filing, according to people familiar with the matter.
The retailer is in the middle of a sale process in hopes of finding a buyer that would keep the doors open for both its flagship chains, its namesake banner and BuyBuy Baby, said the people, who were not authorized to discuss the matter publicly. were.
At the same time, Bed Bath is also looking for a lender to provide financing that will keep the company running as it files for bankruptcy protection in the coming weeks, the people said.
A Bed Bath spokeswoman said Wednesday that the company does not comment on specific relationships, but is working with strategic advisors to evaluate all avenues to gain market share and increase liquidity.
The spokesperson declined to comment further, saying “many avenues are being explored and we are determining our next steps in a more complete and timely manner.”
A representative for AlixPartners, as CNBC recently reported was appointed as a consultant to the companydeclined to comment.
bed bath earlier this month warned it might need to file for bankruptcy after its turnaround plan failed to adequately boost sales and repair its balance sheet. company reported net loss That’s over $1.12 billion for the first nine months of the fiscal year. It has blown through its liquidity in recent months, racked up a huge debt burden, and faces strained relations with its suppliers.
comparable sales declined 32% year over year in the most recent fiscal quarter, Ended on 26 November. Company leaders said the company has a hard time keeping shelves stocked as sellers change payment terms or decide not to ship goods because of the retailer’s financial challenges.
Last week, CNBC Bed Bath is reported to have started another round of layoffs In an effort to further cut costs. The company had approximately 32,000 employees as of February 26, 2022, according to public filings.
The people said the company is working to find a path that sees its chains survive. one day before Bed Bath issues “going concern” warning, it announced in an employee memo that it had hired Sean Hummel, a former Macy’s executive, as senior vice president of stores to lead its namesake brand’s retail, store operations and merchandising operations. Prior to his time at Macy’s, Hummel worked for Abercrombie & Fitch, another retailer that underwent a metamorphosis.
One potential buyer circling Bed Bath is private equity firm Sycamore Partners, according to people familiar with the discussions. Sycamore is particularly interested in Buybuy Baby, the bed bath banner for babies and toddlers, which has outperformed the broader company. People said that the bye-bye baby was most likely to survive.
Still, Bed Bath sales remain entirely on the table — albeit with a much smaller footprint than the store currently has, the people said.
Sycamore is known for acquiring retailers, such as women’s apparel chain Talbots, as well as troubled companies that have filed for bankruptcy, like Asena’s Ann Taylor. A spokesperson for Sycamore Partners declined to comment. DealBook earlier reported Sycamore’s interest in Bye Bye Baby.
Bed Bath has also drawn interest from companies whose intellectual property, or brands, are particularly at risk, the people said. Authentic Brands, which has conducted several bankruptcy-run sales for retailers such as Forever 21, is also focusing on Bed Bath, the people said. A representative for Authentic Brands did not immediately respond to comment.
Short of a sale, the company and its advisors are seeking additional financing for the bankruptcy filing, which could happen in the coming weeks, the people said. The company’s advisors are looking for at least $100 million in debt, 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 such as JC Penney and designer brands.
The Sixth Street facility could be converted into bankruptcy financing, the people said, or the lender or others could convert its debt to equity and become the owner of Bed Bath. A representative for Sixth Street did not immediately respond to comment.
Bed Bath’s financing strategy comes as partner retailer party City demanded Chapter 11 Security This week. Also with a heavy debt burden, Party City is looking to restructure its balance sheet and move with a smaller footprint.
Bankruptcy attorney Eric Snyder of the law firm Wilk Auslander said that sales were unrealistic for Bed Bath due to declining sales and inventory as well as its extended losses.
“They don’t have the availability to fix the ship, and they don’t have the cash to continue operating,” Snyder said. “I don’t see any other option than bankruptcy and liquidation.”
-CNBC Melissa Repko contributed to this report.