Bed, Bath & Beyond Stock Surges On Loan Deal Report Following Cohen Exit

The Wall Street Journal reports that Bed, Bath & Beyond has secured a loan deal after burning through $500 million over its fiscal first quarter.

Bed, Bath & Beyond  (BBBY)  shares surged Wednesday following a report that suggested the struggling home retailer had secured a loan deal that would shore-up its balance sheet.

The Wall Street Journal reported that Bed, Bath & Beyond, which had been paired with JPMorgan Chase JPM as part of its public plan to “work with external financial advisors and lenders on strengthening our balance sheet”, was looking for loans in the region of $375 million. 

Bed, Bath & Beyond said it would update investors on its capital raising plans before the end of the month.

Bloomberg News reported last week that some Bed, Bath & Beyond supplies are either restricting or halting shipments to the retailer after it fell behind on payments amid a broader cash-flow squeeze. Bed, Bath & Beyond said in June that comparable sales over its May quarter fell 27% from last year, pulling overall revenues to just under $1.46 billion.

Bed, Bath & Beyond shares were marked 11.6% higher in pre-market trading to indicate an opening bell price of $9.80 each.

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Recent data from S3 Partners suggests short interest comprises around 52.5% of the outstanding shares of Bed, Bath & Beyond, with bet against the retailer totaling more than $317 million.

A new loan deal could soften the blow from last week’s $60 million sale by activist investor Ryan Cohen.

Cohen’s RC Ventures sold all of hits 9.45 million shares in Bed, Bath & Beyond last week, only months after putting three of this allies on the company board, netting around $60 million in the process. 

Just five months ago, Cohen pressed the retailer to look at several strategic alternatives, including sale of its lucrative buybuy Baby division, and pushed or the ouster of CEO Mark Tritton, who left the group in June.

Recent warnings on softening consumer spending, however, alongside profit forecast cuts from retailers Nordstrom  (JWN)  and Macy’s  (M) , suggest Bed, Bath & Beyond will face a difficult second half as it navigates both Cohen’s exit and a challenging macro environment.

“From a fundamental standpoint, we believe trends at Bed, Bath & Beyond remain challenged as seen in our field work as well as our proprietary KFL Data and Geolocation data,” said KeyBanc Capital Markets analyst Bradley Thomas, who carries an ‘underweight’ trading with a $2 price target on the stock. “We continue to forecast significantly negative EBITDA, EPS, and FCF for Bed, Bath & Beyond in 2022.”

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