Bed, Bath & Beyond (BBBY) shares fell sharply Wednesday after the struggling home goods retailer filed for permission to sell more shares as part of a capital raising plan as it unveiled new store closures and $500 million in loan financing.
Securities & Exchange Commission filings show Bed, Bath & Beyond is seeking permission for the sale of an undisclosed amount of common stock as it moves to capitalize on a 140% surge in the company's share price over the past month while adding to its thinning overall liquidity.
The stock's trajectory was disrupted last week, as well, by the sale of 9.45 million by activist investor Ryan Cohen, who dumped his entire stake in the group, netting around $60 million from the retail-powered rally.
Beyond the capital raising, Bed, Bath & Beyond said it will close around 150 stores, slash overall expenses to around $250 million. It also secured $500 million in new debt financing.
"We are working swiftly and diligently to strengthen our liquidity and secure our path for the future. We have taken a thorough look at our business, and today, we are announcing immediate actions aimed to increase customer engagement, drive traffic, and recapture market share," said interim CEO Sue Gove. "This includes changing our merchandising and inventory strategy, which will be rooted in National Brands. Additionally, we are focused on driving digital and foot traffic, as well as optimizing our store fleet."
"We believe these changes will have a widespread positive impact across customer experience, inventory assortment, supply chain execution and cost structure," Gove added. "The customer underpins our decisions, and we are committed to delivering what they want while driving growth, profitability, and financial returns."
Bed, Bath & Beyond shares were marked 23.8% lower in early trading immediately following news of the share sale filing and the restructuring plans to change hands at $9.23 each.
Recent data from S3 Partners suggests short interest in Bed, Bath & Beyond shares comprises around 38% of the outstanding float, with bets against the retailer totaling more than $385 million.
The retailer, which reportedly secured around $375 million in loan financing last week, will update investors on its turnaround plans later this morning, with a focus on both it near-term financing needs and any potential sale of its lucrative buybuy Baby division.
Bloomberg News reported last week that some Bed, Bath & Beyond supplies are either restricting or halting shipments to the retailer after it fell behind on payments amid a broader cash-flow squeeze. The company said in June that comparable sales over its May quarter fell 27% from last year, pulling overall revenues to just under $1.46 billion.
