Bed Bath & Beyond announced the launch of a new vendor consignment program with ReStore Capital.
ReStore, a credit-focused investment manager, will purchase up to $120 million, on a revolving basis, of pre-arranged merchandise from the company's key suppliers to supplement inventory levels already sold at Bed Bath & Beyond and buybuy BABY, according to a statement from Bed Bath & Beyond.
The new vendor consignment program enables the embattled company to increase its inventory position in “top items,” according to its CEO Sue Gove.
“This capital-light solution can allow us to strengthen merchandise availability and better fulfill demand,” Gove said in a statement.
Vendor consignment program is a win-win
BBBY’s vendor consignment program works by allowing suppliers to place their products in Bed Bath & Beyond stores on a consignment basis. The supplier retains ownership of the products until they are sold, at which point Bed Bath & Beyond pays the supplier for the goods.
The arrangement allows suppliers to avoid the risks and costs associated with traditional product distribution, such as inventory management, shipping, and storage.
For Bed Bath & Beyond, the program allows the company to offer a wider variety of products to its customers, without the financial risk of buying large quantities of inventory upfront. For suppliers, the program provides an easy way to get their products in front of customers and generate revenue, without the overhead costs of traditional distribution.
The news comes as the company warned it will likely go bankrupt if its last-ditch $300 million equity offering fails.
"We expect that we will likely file for bankruptcy protection if we do not receive the proceeds from the offering of securities covered by this prospectus supplement,” the company said.
The troubled home goods retailer on Thursday filed to sell new shares to repay its creditors and enable its strategic initiatives for fiscal 2023, including investing in merchandise inventory, which will be further supported by a realigned store footprint and cost structure.
Shares of BBBY were down 5.4% on Wednesday afternoon.
Contact Angela at angela@proactiveinvestors.com
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