Bed Bath & Beyond (NASDAQ:BBBY) stock is in full focus after the retailer announced an up to $120 million vendor consignment program with ReStore Capital. Under the program, ReStore will purchase, “on a revolving basis at any given time,” up to $120 million worth of pre-arranged merchandise from Bed Bath’s suppliers to “supplement inventory levels already sold at Bed Bath & Beyond and buybuy BABY.” This will allow the company to stock its shelves with popular items desired by consumers.
ReStore operates as an investment management company under the Hilco Global family that provides a variety of businesses with creative financing solutions.
Bed Bath & Beyond CEO Sue Gove said the following about the agreement news:
“The support we are seeing from our top supplier partners demonstrates the staying power of our brands and our potential for sustainable improvement. We know the performance and value of our business today is not representative of our full potential. Our entire organization is focused on expanding and accelerating improvement.”
BBBY Stock: Bed Bath Enters Into Vendor Consignment Program
Bed Bath has had several issues with its suppliers during the past year due to a low cash balance, prepayment requirements and tightening credit conditions. Last fall, the company held a supplier event to address issues and strengthen its relationships with suppliers. On top of that, Bed Bath has closed hundreds of low-producing brick-and-mortar stores in an attempt to cut costs and avoid bankruptcy.
Meanwhile, Bed Bath also announced a $300 million common stock offering earlier this week. That sent BBBY stock spiraling lower due to its dilutive nature. The company warned about the offering:
“If we do not receive the proceeds from the offering of securities covered by this prospectus supplement, we expect that we will likely file for bankruptcy protection.”
That said, Bed Bath & Beyond must complete the offering by April 26. That date is also its deadline to file its Form 10-K. This is because the Form 10-K will address whether or not the company is a “well-known and seasoned issuer.” If Bed Bath is not classified as a seasoned issuer, it won’t be able to act on the offering. Bed Bath has already implied that it doesn’t expect to identify as a seasoned issuer in its Form 10-K.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
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.
