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Bed Bath & Beyond Inc., the Union-based home goods giant, said it is running out of money and may consider filing for bankruptcy protection.

After struggling in recent years to turn itself around amid declining sales, fewer shoppers and inventory outages, the retailer said in a Jan. 5 update it “has concluded that there is substantial doubt about the company’s ability to continue as a going concern” and said it likely will not have the cash needed to cover expenses, such as lease agreements and payments to suppliers.

As a result, Bed Bath & Beyond said is exploring financial options, like restructuring or refinancing its debt, selling assets or seeking additional capital, as well as a potential bankruptcy, but warned, “These measures may not be successful.”

A combination of reduced levels of available inventory and lower customer traffic drove sales down to $1.259 billion for the third quarter of Fiscal Year 2022 — a 33% decrease from the same period last year. Bed Bath & Beyond also expects to report a net loss of around $385.8 million for the period, including impairment charges of $100 million, compared with a net loss of $276.4 million for the same timeframe a year ago.

Bed Bath & Beyond’s full results for Q3 – which ended Nov. 26, just as the key holiday shopping season ramped up – will be reported Jan. 10.

Sticking to the plan

Sue Gove, who took on the role of chief executive officer in October after serving as interim leader, stressed the importance of continuing to implement the company’s two-pronged turnaround strategy.

She also reaffirmed the company’s commitment to rebuilding itself and making sure its brands (Bed Bath & Beyond, Harmon and Buybuy Baby) remain “destinations of choice for customers well into the future.”

The first part of the plan, she said, “enables us to refocus merchandising and inventory, operate more efficiently, and grow our digital and omni-capabilities, and the second focuses on strengthening our financial position. Transforming an organization of our size and scale requires time, and we anticipate that each coming quarter will build on our progress.”

She continued, “Despite more productive merchandise plans and improved execution, our financial performance was negatively impacted by inventory constraints as we partnered with our suppliers to navigate both micro- and macro- economic challenges. Reduced credit limits resulted in lower levels of in-stock presentation within the assortments that our customers expect. Consequently, we have already leveraged the liquidity gained from the holiday season to immediately pursue higher in-stock levels with support from our key vendors.”

According to Gove, when in-stock levels have increased, the company has seen trends improve.

“Strengthening our ability to serve our customers will continue to drive our decision-making. We are resetting foundational elements to create a stronger and more nimble infrastructure that aligns closely with customer demand and preference. We continue to manage our financial position amidst a changing landscape and work with expert advisors as we consider all paths and strategic alternatives to accomplish our short- and long-term goals. We look forward to providing an update on these fronts on our formal third quarter earnings call next week,” she said.

Under the strategic plan announced in August, Bed Bath & Beyond aims to strengthen its financial positioning, increase customer engagement, drive traffic and recapture market share. As part of the first phase, the company closed 150 banner stores – including three in New Jersey – and let go of about 20% of its Bed Bath & Beyond workforce.

Despite calls from activist investor Ryan Cohen for Bed Bath & Beyond to narrow the focus of its turnaround and consider selling Buybuy Baby, the company has said it sees “strategic potential” in the brand and will continue to monitor its progress.