At a time when both suppliers and the financial community are concerned about its prospects, Bed Bath & Beyond has announced that it will hold a conference call to provide a business and strategic update on August 31 at 8:15 a.m. Eastern Time.
Concerns about Bed Bath & Beyond and investor activity have resulted in share-price volatility and descent with poor first quarter results coupled with executive departures undermining confidence in the stock. Bed Bath & Beyond saw its share price driven up as it became a meme stock, then knocked down when Ryan Cohen, an activist investor who held a 10% stake in the company and struck a bargain with the company to put three directors on its board, dumped his shares after the Reddit movement drove up the share price. At one point in mid-August, Bed Bath & Beyond’s stock price surpassed $28 per share, as tracked by Yahoo Finance, but the Cohen decision and reports that the retailer had been slow-paying suppliers drove the stock price down below $10 per share by August 22.
Then, rumors that Bed Bath & Beyond had negotiated a new loan agreement spread and the share price came off the bottom and opened on August 26 at $10.55.
Although the rumors have the company obtaining a major loan meant to right its financial position, Morningstar analyst Jaime Katz, in a research note, cautioned that the potential boost to Bed Bath & Beyond, which tales set at about $400 million, isn’t indicative of a substantive financing fix. The cushion remaining on its $1 billion credit facility and a poor cash flow outlook combined make the loan, as rumor priced it, seem insufficient to meet Bed Bath & Beyond’s needs, Katz maintained.
Under those circumstances, the announcement on the 31st will have to address how Bed Bath & Beyond will finance its initiatives while also meeting its obligations to suppliers and others, which suggests significant cost-cutting efforts may be required and a reckoning on the fate of the company’s popular buybuyBaby operation.
In its own note, Pulse Ratings pointed out that fresh financing alone won’t be enough to halt the damage to Bed Bath & Beyond resulting from its troubling cash burn. New financing should help the company to get current with suppliers but that will mean less cash to fund future capital requirements.
