Bed Bath & Beyond (NASDAQ:BBBY) has been the meme stock to watch out for in 2023. Shares of the struggling retailer were up by more than 150% year-to-date (YTD) this month, although they have since cooled down. For now, Bed Bath has avoided bankruptcy, although the future is still hazy as ever.
Earlier this week, BBBY stock plunged lower after the company announced the completion of a public equity offering. Bed Bath received gross proceeds of $225 million by offering Series A convertible preferred stock, warrants to purchase Series A convertible preferred stock and warrants to purchase common stock. The company also expects to receive another $800 million in gross proceeds through future installments that are contingent on certain conditions, although Bed Bath warned that it “can provide no assurance that it will receive any or all of the future installments.”
The proceeds will be immediately used to repay outstanding borrowings through Bed Bath’s credit facility.
Vanguard Increases BBBY Stock Stake
Vanguard may believe that Bed Bath is on the comeback trail. As of Dec. 30, the exchange-traded fund (ETF) provider reported a 8.57 million share stake in BBBY stock, compared to a 8.20 million share stake as of the third quarter. The firm’s current stake is equivalent to a 7.31% ownership stake.
Granted, Vanguard’s ownership of BBBY is still insignificant relative to its entire portfolio. BBBY is Vanguard’s 2,604th largest 13F position with a portfolio allocation of less than 0.01% according to WhaleWisdom. In other words, Vanguard won’t even flinch if BBBY stock goes to zero.
Along with the public offering announcement, Bed Bath also provided details on its comeback plan. The company has shuttered many stores in order to reach its goal of 360 stores and “approximately 120 buybuy BABY stores” across the nation. These remaining stores were chosen for their high traffic and profitability. Bed Bath will also work to improve its e-commerce offerings by making it a bigger percentage of overall sales.
President and CEO Sue Gove had the following to say:
“We are optimizing our store fleet and supply chain and continuing to invest in our omni-always capabilities. This will enable us to better serve our customers, and grow profitably, by directing merchandise where and how they want to shop with us.”
In addition, Bed Bath will work toward improving its supply-chain process and lowering overall expenses.
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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.
