Looming Bankruptcy – Bed Bath & Beyond Defaults on Credit Line
Revolving around the news of meme stocks, shares of Bed Bath & Beyond just plummeted by 22.22% following some troubling news regarding their financials. The home-goods retailer has announced they do not have enough cash to pay off their debts. The news comes weeks following their warning of a potential bankruptcy, and they have also disclaimed that they defaulted on their credit lines with JPMorgan. Due to the default, Bad Bath & Beyond’s rate of interest will climb 2 percentage points, and they must put up cash collateral to repay their $186 million outstanding debt.
The downfall of Bed Bath & Beyond began with large drops in sales, to which several have credited towards failed business strategy; announced in 2020, Bed Bath stated it would swap common household brands for private label brands to transform the business. Unfortunately, the strategy did not hold well with consumers, as revenue began to dwindle leading to the closing 150 stores and layoffs of 20% of their staff in August of last year. Currently, the company still owes $550 million to JP Morgan, $375 million to Sixth Street, and a total of $1.2 billion in unsecured notes. Now, the company has stated they are planning on paying their debts through all avenues possible, which also includes a potential Chapter 11 filing.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.