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Bed Bath & Beyond gets $120 million lifeline to help it stock near-empty shelves

<i>John Nacion/Shutterstock</i><br/>Bed Bath & Beyond Inc. called off a proposed debt exchange and said it might not be able to continue as a going concern
John Nacion/Shutterstock
John Nacion/Shutterstock
Bed Bath & Beyond Inc. called off a proposed debt exchange and said it might not be able to continue as a going concern

By Chris Isidore, CNN

Cash-starved Bed, Bath & Beyond, which is scrambling to avoid bankruptcy, announced a $120 million lifeline to help it stock near-empty shelves.

One reason that the chain’s sales have fallen and losses have mounted is that the company doesn’t have the funds needed to buy inventory in order to stock shelves.

“Although we moved quickly and effectively to change the assortment and other merchandising and marketing strategies, inventory was constrained and we did not achieve our goals,” CEO Sue Gove said in a statement in January.

The $120 million in financial help is specifically designed to address the need to stock those shelves and attract shoppers back to something other than the “store closing” sales at the locations slated for closure.

The money comes from ReStore Capital, which will purchase up to $120 million of merchandise from Bed, Bath & Beyond’s suppliers in order to supplement stock at Bed Bath & Beyond and buybuy BABY.

The agreement “enables us to increase our inventory position in top items that customers are buying and improve the customer experience,” said a statement from Gove Wednesday. “This … solution can allow us to strengthen merchandise availability and better fulfill demand.”

Retailers that are at risk of bankruptcy have trouble getting inventory from the their suppliers without paying up front, as suppliers don’t want to end up as unsecured creditors in the event of bankruptcy filing. That is one of the reasons it’s difficult for a retailer to pull out of a downward spiral, as they compete with rivals that are not having to pay cash up front.

“The support we are seeing from our top supplier partners demonstrates the staying power of our brands and our potential for sustainable improvement,” Gove said in her statement. “We know the performance and value of our business today is not representative of our full potential.”

But the financial assistance from ReStore Capital might not be enough to save the company from bankruptcy. Last week, the company disclosed in a filing plans to sell $300 million worth of its stock to raise much-needed cash. It said that failure to sell that amount of stock would “likely force us to file for bankruptcy protection.”

Even with Wednesday’s cash infusion, it has not announced plans to scale back its stock sales plans or said it is no longer facing the risk of bankruptcy. The proceeds of the stock sale would give the company cash it needs to pay down debt that it cannot afford, while the assistance it is getting from ReStore Capital that would instead just give it much-needed additional inventory.

The company is also in the process of closing most of its remaining stores, with 400 of its roughly 760 stores in the process of shutting down in an effort to stem soaring losses.

— CNN’s Nathaniel Meyersohn contributed to this story

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