Shares of Bed Bath & Beyond (NASDAQ:BBBY) are up by more than 15% year-to-date, but the long-term prospects for BBBY stock aren’t looking so rosy. This morning, Reuters reported that the home goods retailer could file for bankruptcy protection by as soon as this week.
According to four people familiar with the situation, Bed Bath & Beyond has utilized liquidators to help close additional stores unless an interested party willing to make an acquisition steps in. It has also been reported that the company has been tied up in meetings to explore alternatives to bankruptcy.
In a statement to Reuters, Bed Bath & Beyond added it would continue to explore “multiple paths.” These paths could include debt or equity financing, selling assets and filing for bankruptcy.
BBBY Stock: Bed Bath Could File for Bankruptcy This Week
Earlier this week, it was reported the company would shut down 87 Bed Bath & Beyond stores, five Buybuy Baby stores and all 50 Harmon locations. By February, it expects to shut down an additional 150 stores. As of November, the company operated 762 Bed Bath & Beyond stores and 137 Buybuy Baby stores. Its expected to close down a total of 287 stores.
Meanwhile, two sources close to the matter stated Bed Bath & Beyond is currently in talks with Sixth Street to provide financing. The investment firm loaned the company $375 million in late 2022.
As of November, Bed Bath & Beyond had $2.57 billion in current liabilities. It also owed $925 million under two credit facilities. Earlier this month, the company warned it had triggered “certain events of default” due to a nonpayment on an over-advance for a credit facility. In a filing, Bed Bath & Beyond added:
“At this time, the Company does not have sufficient resources to repay the amounts under the Credit Facilities and this will lead the Company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code.”
At the same time, retail and meme stock investors have been heavily drawn towards volatile companies, especially ones with high short interest. As of Jan. 15, BBBY carried a short interest as a percentage of float of 47.01%, up 37.2% month-over-month. That figure is more than high enough to drive a momentous short squeeze. In addition, the short interest is equivalent to 52.89 million shares sold short with a value of $193.58 million.
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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.
