It has been a tumultuous week for Bed Bath & Beyond Inc., as the troubled company averted bankruptcy with what has been described as an “unusual” equity offering.
The home-goods retailer and meme-stock phenomenon is also expanding its effort to close down stores. On Tuesday, Bed Bath & Beyond BBBY,
As of Nov. 22, 2022, the company had a total of 949 stores, including 762 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada; 137 Buybuy Baby stores; and 50 stores under the names Harmon, Harmon Face Values or Face Values.
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So, what are the prospects for the embattled company?
“I still don’t believe that this turnaround plan ever sees a rosy future,” Eric Schiffer, chief executive and chairman of private equity firm Patriarch Organization, told MarketWatch.
Schiffer estimates that the store closings will have an impact of “north of $1 billion” on Bed Bath & Beyond’s sales, while “feeding” competitors such as Walmart Inc. WMT,
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Wedbush analyst Seth Basham is also skeptical of Bed Bath & Beyond’s turnaround potential. “We see a low probability that the company achieves its 2023 turnaround plan,” he said, in a note released Wednesday.
The moves proposed by Bed Bath & Beyond aim to generate additional liquidity, satisfy the company’s defaulted loans and missed interest payments, and, most importantly, buy it more time, according to the analyst.
Despite this week’s equity offering, bankruptcy is still looming on the horizon for Bed Bath & Beyond, according to KeyBanc Capital Markets analyst Bradley Thomas.
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“While the offering has averted what was reportedly an imminent bankruptcy (bringing in $225M), we believe BBBY’s fundamentals and cash burn rate (of $400M in the most recent quarter) still make a bankruptcy seem like the most likely outcome eventually,” he wrote.
Bed Bath & Beyond’s stock rose 92% Monday in a move that swept up fellow meme stocks AMC Entertainment Holdings Inc. AMC,
The home goods retailer’s stock has fallen 85% in the past 12 months, hitting a 52-week low of $1.27 on Jan. 6. The S&P 500 index SPX,
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Of 11 analysts surveyed by FactSet, two have a hold rating, and nine have an underweight or sell rating for Bed Bath & Beyond.