Bed Bath & Beyond (NASDAQ:BBBY) stock is in full focus after the company announced that it would provide a strategic update on Aug. 31. Shares of the home goods company are down more than 25% year-to-date (YTD) as it deals with inflation, falling consumer sentiment and supply-chain issues.
Last week, the company announced that some of its vendors were restricting or completely cutting off shipments after Bed Bath & Beyond fell short on payments. In addition, some of the firms who provide financing or credit insurance to these vendors have revoked coverage to the struggling retailer. A survey done by independent credit firm Pulse Ratings concluded that Bed Bath was “in arrears with all respondents.” Some of these respondents stated that over half of their accounts receivable from the company were late.
With that in mind, let’s take a look at three factors that BBBY stock investors should watch ahead of the Aug. 31 meeting.
BBBY Stock: 3 Things to Watch at the Aug. 31 Meeting
First, investors will want to watch out for updates on a roughly $400 million loan from Sixth Street Partners. This loan would help increase the company’s liquidity and offer Bed Bath the chance to pay back vendors. The loan will be first-in-last-out (FILO), which means that it will only be paid out after other secured debt if a bankruptcy occurs, putting greater risk on Sixth Street. In the past, the asset management firm has made loans to other retailers, including JC Penney and Designer Brands (NYSE:DBI).
Next, investors are anticipating an update on a new CEO. Earlier this year, Bed Bath & Beyond’s board removed former CEO Mark Tritton and replaced him with interim CEO Sue Gove. Tritton joined the company back in 2019 but was unable to turn Bed Bath & Beyond around. He led the effort in launching private label brands, remodeling stores and attempting to increase e-commerce sales.
Finally, investors will want to hear how Bed Bath & Beyond expects to navigate the holiday season. Morgan Stanley analyst Simeon Gutman says, “Assuming financing is obtained, Q4′s performance may hold the key to BBBY’s future viability.” The fourth quarter is a major source of revenue for many retailers. The completion of the $400 million loan from Sixth Street will be paramount to Bed Bath’s success this holiday season.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.