'Meme stock' Bed Bath & Beyond considers bankruptcy... stock price plunges 27%

[Asia Economy New York=Special Correspondent Joselgina] Bed Bath & Beyond (BBBY), a U.S. household goods retailer that gained attention as a Wall Street "meme stock," announced on the 5th (local time) that it is considering filing for bankruptcy due to financial difficulties. Accordingly, Bed Bath & Beyond's stock price plunged over 27% on the New York Stock Exchange that day.

[Image source=Reuters Yonhap News]

Bed Bath & Beyond stated in a press release that "the company has concluded there is substantial doubt about its ability to continue as a going concern." The company confirmed that it is exploring several options, including the possibility of bankruptcy filing, debt restructuring, additional capital raising, asset sales, and other strategic transactions.

This judgment comes as sales decline and liquidity crises persist despite consecutive store closures, layoffs, and various restructuring measures, leading to a shortage of cash to cover basic operating expenses in the coming months. Bed Bath & Beyond also reported recent difficulties in stocking inventory at stores and an inability to refinance some of its debt.

Sudhakar Bed Bath & Beyond CEO said, "We hope to provide updated news in the official Q3 earnings announcement next week," adding, "We will strive to remain the destination customers choose."

Bed Bath & Beyond is expected to report net sales of $1.259 billion for the third quarter of fiscal year 2022 (September to November). Due to decreased customer visits and worsening inventory availability, a sharp decline is forecasted compared to the same period last year ($1.878 billion). This figure also falls short of FactSet's estimate ($1.46 billion). Net losses for the same period are estimated to have widened by over $100 million year-over-year to $385.8 million.

Bed Bath & Beyond is one of the representative meme stocks that attracted a large number of individual investors last year through word of mouth on online communities such as Reddit. With the bankruptcy filing possibility reported, the stock was trading around $1.75 per share, down more than 27%, at 3:30 p.m. just before the market close on the New York Stock Exchange.