The administrator, Michael Goldberg, sued a New Jersey agency to recover $19 million worth of tax credits that he claims are owed under economic development contracts. Between January and August 2022, while the defendants “were acting as BBBY’s statutory directors,” they used insider information to trade BBBY stock, according to the complaint filed Thursday in the US District Court for the Southern District of New York. He previously worked as a reporter for the Omaha World-Herald, Newsday and the Florida Times-Union.
Marketplace
It added that the 360 Bed Bath & Beyond and 120 Buy Buy Baby locations and websites would stay open and continue to serve customers as the company begins to shutter its retail locations. But the relaunched Bed Bath website may have to lean heavily on deals and discounts in order to separate itself from the vast marketplace of competing online retailers, said Neil Saunders, managing director for retail at the GlobalData consultancy. Bed Bath & Beyond’s website relaunched Tuesday under its new owner, Overstock.com, breathing new life to the iconic home goods retailer declared bankrupt earlier this year. “We encourage you to shop your favorite products at deep discounts during our store closing sales, starting April 26, 2023,” the company said.
Bankruptcy and liquidation
Bed Bath & Beyond filed for Chapter 11 bankruptcy Sunday, with plans to wind down its entire business. Though now worth less than $1, its shares have climbed approximately 19% in the past 30 days on reports that the company was successfully paying off some of its debts. Bed Bath & Beyond closed multiple locations as part of its early efforts to cut costs. The suit is among efforts by the company and its bankruptcy plan administrator to recover funds for its creditors.
Bed Bath & Beyond comes back as an online retailer
The company that used to be known as Bed Bath & Beyond Inc. sued Ryan Cohen and his company, RC Ventures LLC, to recover $47 million they made from alleged insider trading in 2022. In the meantime, Bed Bath & Beyond is focusing on shoring up its financials, with GlobalData analyst Neil Saunders describing them as “in a parlous state.” The company had spent the past year announcing a series of job cuts and store closures as it looked for financing options to stay afloat. “In two or three years, memories will fade. So you need a strategy to keep the brand alive in consumers’ minds.” The new company could also ultimately be hindered by the closure of Bed Bath’s stores, Saunders said.
The company said the move would not affect Bed Bath & Beyond’s physical store locations, which are still slated to close. Trefis estimates Bed Bath & Beyond’s Q revenues to be around $2.08 Bil, slightly ahead of the consensus estimate. During the first quarter of 2021 (ended May 29), Bed Bath & Beyond’s revenue grew by a strong 49% year-over-year (y-o-y) to $1.95 billion, due to sustained consumer interest across its bedding, bath, indoor decor, kitchen food prep, and home decoration products. While Bed Bath’s Q1 comparable sales growth of 86% saw an easy comparison y-o-y, this metric was up 3% in comparison to Q1 of 2019.
Going by our Bed Bath & Beyond’s Valuation, with an earnings per share estimate of around $1.47 and P/E multiple of 19.6x in fiscal 2021, this translates into a price of around $29, almost 26% higher than the current market price. The company generated $75 million in operating cash flow during the quarter, driven by working capital improvement. Its total liquidity came up to $2 billion – with $1.1 billion in cash and investment and another $1 billion from the asset-based revolving credit facility. As such, it looks like the company can still continue to spend on its turnaround initiatives going forward. However, everything will hinge on its ability to maintain its sales levels while improving profitability over the long term. The former Bed Bath says it’s entitled to recover Cohen’s and RC Ventures’ alleged short-swing profits.
At the time of its bankruptcy filing, Bed Bath & Beyond reported debts of more than $5 billion. The company folded despite multiple attempts to revive the flagging brand, including a short-lived intervention last year by current GameStop Executive Chairman Ryan Cohen. Part of Cohen’s proposed turnaround strategy involved spinning off Buy Buy Baby, which he said in a March 2022 letter was likely “much more valuable” than Bed Bath & Beyond’s entire market capitalization. A bankruptcy court judge approved Overstock’s all-cash $21.5 million bid for Bed Bath & Beyond’s intellectual property assets on Tuesday.
- The company said the move would not affect Bed Bath & Beyond’s physical store locations, which are still slated to close.
- Despite a $10 billion market cap and a price-to-earnings ratio of 260x, the company’s Q1 revenue continues to fall.
- The company ended the quarter with $1.083 billion in cash and marketable securities, and long-term debt remains a low-interest, unsecured term loan from the French government’s COVID-19 response.
Its number of active customers for the quarter fell to 4.6 million, down 29% from the same period last year. Also to note, in early May, GME surged as Keith “Roaring Kitty” Gill made a reappearance. June saw Gill’s public disclosures and GameStop’s stock offering, driving shares up to $48. Although it made a stir in the meme stock market, Wedbush still maintained a “sell” rating for GME and reduced its 12-month price target to $11 from $13.50.
Johnson said an internal customer research survey showed Bed Bath & Beyond was still considered a top-five home goods retail brand among North American consumers. The beleaguered company has laid out what the action means for its customers in an online FAQ page.
This enabled it to post earnings per share of -$0.48, compared to a loss of $2.44 during the same period in the previous year. While Bed Bath & Beyond has become a “meme stock” after attracting the favor of amateur investors, its shares have plunged 47% this year amid declining revenue, widening losses and the defection of a prominent investor. In August, Ryan Cohen, the billionaire founder of online pet food company Chewy, sold his stake of 7.7 million shares, spurring a selloff.
Cohen and the fund “made dozens of purchases and sales of BBBY’s equity securities between January and August 2022, all of them profitable and most within a single period of less than six months,” the bankrupt entity says. Moreover, with a shrinking market and over 306 million shares outstanding, GameStop faces challenges from digital gaming. Its $11 billion valuation and potential for further dilution make it more suitable as a trading stock rather than a long-term investment. SG&A expenses were $295.1 million, 33.5% of net sales, up from $345.7 million, 27.9% of net sales, last year. The company ended the quarter with $1.083 billion in cash and marketable securities, and long-term debt remains a low-interest, unsecured term loan from the French government’s COVID-19 response. That said, despite its recent moves higher and previous nostalgic rallies, it’s hard to ignore the underlying fundamentals of GameStop’s core business.
The stock, driven by speculation, is likely to face a significant pullback as fundamentals take precedence. The involvement of the most recent activist, GameStop Chairman Ryan Cohen, breathed new life into the company’s shares one year ago. But five months after appointing three board members, Cohen sold his shares in the company, sending its value plummeting. Bed Bath & Beyond filed for Chapter 11 bankruptcy protection Sunday, ending a tumultuous chapter for the struggling home goods retailer.
To help fund its operations in bankruptcy, it said Bed Bath & Beyond had raised $240 million from the investment firm Sixth Street Specialty Lending. The goal, said Overstock CEO Jonathan Johnson, is to combine Bed Bath’s brand name with Overstock’s business model “to create a business that can soar.” Despite being near profitability and having a strong balance sheet, GameStop could potentially evolve into a holding company under Cohen’s management. Bed Bath & Beyond filed for bankruptcy protection in April, and the fate of its Buy Buy Baby subsidiary remains to be seen. RC Ventures is the largest holder of GameStop Corp. shares with an 8.7% stake in the company as of June 10, according to data compiled by Bloomberg.
At that point, the company said, customers of both Overstock and Bed Bath & Beyond will encounter a single online shopping destination at bedbathandbeyond.com. In a press release Wednesday afternoon, Overstock said that within the next week it would debut a new Bed Bath & Beyond website in Canada, followed weeks later by the relaunch of a refreshed website, mobile app and loyalty program in the United States. Those appointees on the board “prevailed in securing the Cohen Defendants significant access to material nonpublic information about BBBY,” the former retailer says.
The home goods store posted a list of 56 stores that will be shuttered, ranging from stores in Arizona to Washington state. Those stores will start closing soon “and continue over the next few months,” the company said. The company didn’t disclose when it would announce the remaining stores set to close. Overstock.com, launched in 1999 as a liquidator and gone public in 2002, saw quarterly net revenues decline 20% year-on-year last quarter to $422 million. The company had a net quarterly loss of $73 million in the same three-month period.
His reporting primarily focuses on the U.S. housing market, the business of sports and bankruptcy. “The past few years of poor strategy have caused severe financial pain, and the scars will be borne in around 150 store closures and a curtailment of refurbishment programs,” he said in a recent research note about the closures. “These actions are necessary, but they underline that before the group can advance it will need to take several steps back.” Investors were also rattled earlier this month when its chief financial officer, Gustavo Arnal, died after falling from a luxury skyscraper in downtown Manhattan.
The company’s fiscal Q1 results for the period ending May 4 were hard for many investors to swallow, with the company’s core business struggling. Although the company seems to have taken steps in the right direction, everything will hinge on its ability to maintain its sales levels over the long term. Bed Bath & Beyond’s Q earnings per share are expected to come in at 54 cents per Trefis analysis, 4% higher than the consensus estimate of 52 cents. In Q1 2021, the company reduced its SG&A expenses by 9% compared to the prior-year period.