Bed Bath & Beyond shares crater after meme stock offering of undisclosed amount


Signage outside a Bed Bath & Beyond store in New York, August 25, 2022.

Gabby Jones | Bloomberg | Getty Images

Bed Bath & Beyond shares fell after the retailer converted meme stock, said in a filing it would sell shares of an undisclosed amount, announced $500 million in new funding and plans for layoffs.

In premarket trading, the share fell by 24%.

“We may offer, issue and sell shares of our common stock from time to time,” the company said in Wednesday’s filing with the SEC. Under the shelf process, the company may sell the securities listed in one or more listings.

“Each time we offer securities, we will provide a prospectus supplement with specific information about the terms of that offering,” the filing said.

The document also notes that the company plans to use the net proceeds from any sale of securities for “general corporate purposes,” including paying back debt, repurchasing stock or financing potential acquisitions.

Later in the morning, the company announced that it had secured a $375 million loan, part of more than $500 million in new financing, including a $1.13 billion asset-backed revolving credit facility. IT will also try to cut costs by closing stores and laying off employees. The news sent stocks even lower.

Inbound turnaround plan

The filing comes just hours before Bed Bath & Beyond will outline a turnaround plan on Wednesday in an effort to regain the confidence of shoppers, investors and suppliers. Some investors had called on the retailer to capitalize on its meme status by issuing shares to raise much-needed cash.

The company had previously said it was working with financial advisors and lenders to strengthen its balance sheet. In the most recent quarter, the retailer’s net loss increased and the company ended May with about $100 million in cash, down from $1.1 billion a year ago.

It may also be in the process of getting a loan — The Wall Street Journal reported last week that the firm and asset manager Sixth Street Partners is approaching final terms on a nearly $400 million loan. Sixth Street and Bed Bath did not respond to CNBC’s requests for comment.

Aside from its financials, the company can also discuss how it plans to lure customers back, strengthen problems with its supply chain and move inventory. Investors are also waiting for more information about a potential sale or spin-off of the Buybuy Baby brand.

Meme stock runup

Bed Bath & Beyond shares rose in August as an overall market comeback encouraged so-called meme traders to take some risk again in the troubled and badly shorted retailer. The stock’s movement gained momentum throughout the month as small traders discussed the stock on Reddit message boards and hedge funds were forced to hedge their bets against it.

The enthusiasm of meme traders was somewhat tarnished and the stock peaked after activist investor Ryan Cohen sold his sizable position in Bed Bath & Beyond. The stock was still up more than 140% this month until Tuesday’s close.

CNBC’s Melissa Repko contributed to the report.

This is a story in development. Come back for updates.

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