US retailer Bed Bath & Beyond has staved off collapse after securing US$225mln from an equity offering on Tuesday, but commentators said the respite might be short-lived.
A further US$800mln will likely be required in the next 10 months to avoid bankruptcy said analysts, who said this last-ditch effort to secure funding is only a short-term fix.
“The fact it is closing more stores to save money suggests Bed Bath & Beyond Inc would emerge a much smaller version of itself should it survive, and that is in a world where it must compete with some of the biggest companies in the world,” City Index’s Joshua Warner said.
Warner also hinted the retailer could be eyeing a takeover or more asset sales, commenting that equity offerings merely reset the clock rather than settling issues.
The struggling retailer saw its share price tumble 49% during Tuesday’s trading, from US$5.84 to US$3.01, as news of the equity offering priced at US$2.37 was released.
Bed Bath also reported sales had slumped nearly 30% year on year in the third quarter.
The retailer is one of a group of so-called meme stocks, a phenomenon where small-time investors clubbed together and used Reddit and other apps to rout hedge funds shorting companies such as Bed Bath and Beyond, AMC, Gamestop, Blackberry (TSX:BB) and others.
Bed Bath and Beyond shares hit US$26.90 in August last year as a result of one of these mass buy-ins - in this case, prompted by the role of activist investor Ryan Cohen.
In January 2021 the shares hit US$34.31 when meme stock activity was at its height driven by trading on the Robinhood Markets trading platform.