Bed Bath & Beyond gets $120 million merchandise lifeline

In its latest move to avoid bankruptcy, Bed Bath & Bath Inc. has entered into a deal to help boost its inventory, increasing merchandise availability.

The embattled, cash-starved retailer announced a vendor consignment program with ReStore Capital, a Hilco Global company. Under the terms of the third-party agreement, ReStore Capital will purchase up to $120 million — on a revolving basis at any given time — of pre-arranged merchandise from Bed Bath & Beyond’s key suppliers to enhance inventory levels at its namesake and Buybuy Baby stores.

Bed Bath & Beyond been challenged as its key vendors have imposed tight restrictions, including requiring pre-payments before fulfilling orders. 

“We remain relentless in executing plans that can help us overcome near-term operational and financial challenges,” said CEO Sue Gove. “Our new vendor consignment program enables us to increase our inventory position in top items that customers are buying and improve the customer experience. This capital-light solution can allow us to strengthen merchandise availability and better fulfill demand."

The new agreement is Bed Bath & Beyond’s latest move in its ongoing effort to avoid filing for bankruptcy. In February, the company said it had completed a stock offering that was expected to bring some $1 billion in equity to the company. But it ultimately only raised $360 million.

Last week, the retailer proposed another stock offering of $300 million and warned in a filing that if its proposed new offering did not come off, it would “likely” have to file for bankruptcy protection.

“We likely would be required to file for bankruptcy protection if the company does not receive the proceeds from the offering covered by this prospectus supplement, the company would not have the financial resources to satisfy its payment obligations under the credit facilities, and the company expects that it will likely file for bankruptcy protection and that its assets will likely be liquidated,” Bed Bath & Beyond stated in the filing.

Also last week, the company reported preliminary results for its fiscal fourth quarter that included a comparable store sales drop in the range of 40% to 50%. Net sales were estimated at approximately $1.2 billion, compared to $$2.05 billion in the year-ago quarter.

In a release announcing the new vendor consignment agreement, CEO Gove said that Bed Bath & Beyond “remains relentless in executing plans that can help us overcome near-term operational and financial challenges.”

“We know the performance and value of our business today is not representative of our full potential,” she stated. “Our entire organization is focused on expanding and accelerating improvement. I want to acknowledge and express our gratitude for our suppliers, associates, business partners such as Restore Capital, and our shareholders who have been instrumental in fueling our determination for a successful turnaround."

ReStore Capital, a Hilco Global company, is a credit-focused investment manager providing “creative financing solutions” in the consumer, retail, commercial, wholesale and manufacturing industries.