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Bed Bath & Beyond seeks capital infusion, buyer ahead of likely bankruptcy

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bed bath and beyond has been in discussions with potential buyers and lenders as it works to keep its business afloat during a likely bankruptcy filing, according to people familiar with the matter.

The retailer is in the process of selling in hopes of finding a buyer that will keep the doors open for the two big chains, its namesake banner and Buybuy Baby, said the people, who are not authorized to discuss the matter publicly.

At the same time, Bed Bath is also looking for a lender to provide financing that would keep the company afloat if 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 has been working with strategic advisors to evaluate all avenues for regaining market share and increasing 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 has been hired as a consultant to the company, declined to comment.

Earlier this month, Bed Bath warned that it may need to file for bankruptcy after its turnaround plans failed to substantially increase sales and repair its balance sheet. The company reported net losses of more than $1.12 billion in the first nine months of the fiscal year. It lost its liquidity in recent months, took on a heavy debt load and faced strained relations with its suppliers.

Comparable sales were down 32% year-over-year in the most recent fiscal quarter, ended Nov. 26. challenges.

Last week, CNBC reported that Bed Bath had begun another round of layoffs in a bid to further cut costs. The company had around 32,000 employees as of February 26, 2022, according to public records.

The company has been working to find a route that will allow its chains to survive, the people added. The day before Bed Bath issued a “continuity” notice, it announced in an employee memo that it had hired Shawn Hummell, a former Macy’s executive, to lead its namesake brand’s retail, store operations and merchandising operations as Senior Vice President of Stores. Before working at Macy’s, Hummell worked for Abercrombie & Fitch, another retailer that has seen a turnaround.

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, Bed Bath’s brand for babies and toddlers, which has outgrown the company as a whole. Buybuy Baby was considered more likely to survive going forward, the people said.

Still, a Bed Bath sale as a whole remains on the table — albeit with a much smaller store presence than it currently does, the people said.

Sycamore is known for acquiring retailers such as womenswear chain Talbots, including struggling companies that have sought bankruptcy such as Ann Taylor of Ascena. A spokesperson for Sycamore Partners declined to comment. Dealbook previously reported Sycamore’s interest in Buybuy Baby.

The Bed Bath has also attracted interest from companies that acquire intellectual property, or brands, from companies, particularly struggling ones, the people said. Authentic Brands, which has frequented many sales at retailers such as Forever 21, is also eyeing Bed Bath, the people said. A representative for Authentic Brands declined to comment.

Ahead of a sale, the company and its advisers have been seeking additional funding for a bankruptcy filing, which could occur in the coming weeks, the people said. The company’s advisers are looking for a loan of at least $100 million, one of the people said.

Last year, Bed Bath received $375 million in new financing 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 creditor or others could convert its debt to equity and become the owner of Bed Bath. A representative for Sixth Street declined to comment.

Bed Bath’s financing strategy comes as fellow retailer party city sought Chapter 11 protection this week. Also with a large debt load, 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 falling sales and inventory, as well as rising losses.

“They don’t have the availability to fix the ship and they don’t have the money to keep operating it,” Snyder said. “I just don’t see any option other than bankruptcy and liquidation.”

— from CNBC Melissa Repko contributed to this report.

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