Sears Holdings, which owned the Sears and Kmart brands, repurchased $6 billion of its stock between 2005 and its 2018 bankruptcy filing. Share repurchases are forecast to top $1 trillion this year.Īnd Bed Bath & Beyond isn’t even the first retailer to spend billions of dollars repurchasing its own stock on its way to bankruptcy court. (CVX) recently announced plans to repurchase $75 billion worth of its stock with windfall record profits that came from high oil prices.Īcross Corporate America, share repurchases reached a record $936 billion, according to S&P Dow Jones Indices, up from $882 billion in 2021. Its stock plunged 83% last year, and another 88% so far this year before it closed at 29 cents a share on the Friday before the bankruptcy filing.īed Bath & Beyond’s buyback programs are hardly unique. It spent an average of $16.04 on each share.īut its efforts to support the stock price did little to help. “Even M&A would be less risky than a straight share repurchase.”īed Bath & Beyond was engaged in an active share repurchase program right up until February of 2022, spending $230 million on shares in an accelerated repurchase program over the course of three months. Generally, we would prefer to use their cash flow to invest back in business,” said Sarah Wyeth, the lead credit analyst for the consumer and retail sectors for S&P. “We understand they have the equity shareholders to serve. The company had carried relatively little debt to that point, and it put Bed Bath & Beyond on a path toward a debt load that ultimately proved unaffordable.Ĭustomers shop in a Bed Bath & Beyond store on in Miami, Florida, on Monday, the day after it it filed for bankruptcy. “The company’s stewardship of their capital failed,” said Declan Gargan, retail director and credit analyst who follows Bed Bath & Beyond for S&P Global Ratings.īed Bath & Beyond grew particularly active share repurchases in July 2014, taking on $2 billion in debt to finance share buybacks, as it started to face pressure from activist shareholders to improve the stock’s performance. It left the company unable to buy the inventory required to create the sales it needed to reverse losses. The $11.8 billion Bed Bath & Beyond spent on its own stock since 2004 comes to more than twice the $5.2 billion in debt it had on its books in its most recent SEC filing, a debt load that proved crushing for the company. Instead, it fueled a desperate and ultimately failed effort to support its stock price. But for a cash-starved business that announced it would likely be forced to close all of its stores if it couldn’t find an 11th-hour savior to buy it, the money could have been better spent. The company’s repurchase program wasn’t unique. Among the most consequential was the $11.8 billion it has spent since 2004 to buy back its own shares. Gove said in the memo Tuesday that Bed Bath will hold a town hall on Wednesday to discuss its future.Bed Bath & Beyond made plenty of mistakes that led to this week’s bankruptcy filing. In August, it said it would cut about 20% of its corporate and supply chain workforce and close about 150 of its namesake stores.Įarlier Tuesday, Gove told investors that Bed Bath has made progress in reducing its operating expenses and will cut costs by an additional $80 million to $100 million, with some of those savings coming from a reduced workforce. 26, 2022, according to a company filing.īut since then, the company's employee count has gotten smaller. Bed Bath issued a "going concern" warning last week, saying it may run out of funds to cover expenses.īed Bath had about 32,000 employees, as of Feb. The company's store shelves have gotten barer as suppliers demand upfront payment, stop shipping goods or change other payment terms. A representative for Berkeley Research Group didn't immediately respond to a request for comment.īed Bath & Beyond is approaching a potential bankruptcy, as its sales decline and losses grow. Multiple paths are being explored and we are determining our next steps thoroughly, and in a timely manner."ĪlixPartners declined to comment. Initially, Bed Bath was working with Berkeley Research Group, but opted to replace the firm with AlixPartners recently, said people familiar with the matter, who declined to be named because they weren't authorized to discuss the matter.īed Bath said it doesn't comment on "specific relationships." The company instead referred to earlier comments from Gove: "We have a team, internally and externally, with proven experience helping companies successfully navigate complex situations and become stronger. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |