Take our debt, please!
Struggling retailer Bed Bath & Beyond is coming up woefully short in a key debt exchange designed to give the company some much-needed financial breathing room. The company said Tuesday that it would extend its debt exchange offer to Dec. 19 from Dec. 5.
The extension reflects limited appetite by debt-holders in the debt swap, according to data supplied by the retailer (right hand column in chart below). Such limited appetite likely reflects the concern among debt-holders on Bed Bath & Beyond's survivability and getting paid back if the company should go bust.
The retailer has battled all year long with tanking sales, weak store traffic, low cash levels, and merchandise not aligned with customer tastes. Earlier this year, the board ousted Bed Bath & Beyond's turnaround CEO Mark Tritton. Other execs have fled as cash-saving, cost-cutting efforts are underway.
Furthermore, the company — which has been heavily discounting products this holiday season in an effort to raise badly needed cash — has shown next to no signs of life under new CEO Sue Gove.
Comparable store sales crashed 26% from a year ago in the fiscal second quarter as the economic slowdown and poor inventory quality weighed on store traffic. The challenged top line and increased discounting led to the company posting an operating loss of $168 million in the quarter.
Bed Bath & Beyond stock are down 16% in the past month versus a 4.5% gain for the S&P 500.
Not helping sentiment or the debt swap efforts is that Bed Bath & Beyond may be having an ugly go of it during the all-important holiday season.
U.S. web traffic for Bed Bath & Beyond dropped a startling 19% in November, according to new research from Jefferies analyst Jonathan Matuszewski. The declines worsened from Thanksgiving through Cyber Monday with a crash of about 25% versus the prior year.
Matuszewski slashed his estimates for Bed Bath & Beyond across the board.
"For the fiscal third quarter, we are lowering our comparable sales estimate to [-23%] from [-15%] prior," Matuszewski warned. "Management indicated that the quarter-to-date trend through September had not changed materially from the fiscal second quarter, though we now believe it has weakened as the quarter progressed with sustained pressure in November."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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