Bed Bath & Beyond—which raised more than $1B in an equity offering of preferred stock earlier this month that enabled the retailer to avoid bankruptcy—has notified an Ontario court that the infusion of capital will not be enough to permit the company to keep operating in Canada.
Bed Bath & Beyond Canada (BBB Canada) told the court in filings that it is “insolvent” and has “reluctantly concluded” that the equity offering did not raise enough capital to restructure its US stores and bring its Canadian business back to profitability.
The court statements, which were posted on the website of Alvarex and Marsal—consultants who were appointed by the court as a monitor of BBB Canada—also said the retailer’s Canadian outlets would not be profitable if spun off as a standalone business.
The retail chain said it will close its 54 Bed Bath & Beyond stores and 11 Buybuy Baby outlets in Canada. The company said it will undertake “an orderly liquidation” of its remaining inventory at the Canada locations, “with assistance from a third-party professional liquidator and vacate its leased retail stores and premises,” according to a report in Chain Store Age.
The retailer also provided the court with what it called a “strategic update” that clarified the scope of the company’s restructuring of its retail footprint in the US, a series of “incremental” store closures that will reduce the company’s portfolio from the 762 stores that were operating in November to 480.
The restructured US operation will encompass 360 Bed Bath & Beyond stores and 120 Buybuy outlets, the company said. Last week, the firm said it was shutting its Harmon cosmetics chain and closing 150 “lower-producing” Bed Bath & Beyond stores.
“In response to evolving shopping preferences today, this target store base includes the company’s most profitable locations and best geographic presence for customers that can enable an optimal omni-experience,” the company said, adding that its digital channel is generate a higher proportion of sales.
The court filings in Ontario were made after Bed Bath & Beyond’s Canadian division filed for protection under Canada’s version of Chapter 11, known as the Companies’ Creditors Arrangement Act.
“The wind-down process must be commenced as soon as possible to maximize recoveries and limit costs by ensuring that BBB Canada can exit from all retail stores as soon as practicable and avoid further rent, employee costs, critical supplier/service provider fees, bank fees and other ongoing amounts,” the retailer said in its court filings.
Last week, Bed Bath & Beyond completed an equity offering that raised about $225M in cash, with an additional $800M that will come in future installments. The company also secured a $100M loan from Sixth Street partners, CSA reported.
In its “strategic update,” Bed Bath & Beyond said it will pursue “asset-light” inventory management strategies, including vendor-direct-to-consumer and marketplace sales.