Bed Bath & Beyond taps Kirkland & Ellis for debt help: Bloomberg - The Entrepreneurial Way with A.I.


Friday, August 19, 2022

Bed Bath & Beyond taps Kirkland & Ellis for debt help: Bloomberg


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Dive Brief:

  • Bed Bath & Beyond has brought on the restructuring specialist law firm Kirkland & Ellis for help with its debt, according to a Bloomberg report that cited an anonymous source.
  • Restructuring could include new loans, refinancing existing loans or both, Bloomberg reported.
  • Bed Bath & Beyond, which has roughly $1.4 billion in long-term debt, did not respond to Retail Dive’s request for comment. The company noted earlier this week that it was working with lenders and outside financial advisers to address its balance sheet.

Dive Insight:

Bed Bath & Beyond has had a tumultuous year so far. It has come sputtering out of the boom in home goods during the early stages of the pandemic.

Over the latter part of 2021 and 2022 so far it has been losing sales due to supply chain woes and now to a consumer pullback from discretionary spending. Its latest reported quarter brought a 25% decline in sales, a $358 million net loss, the exit of a CEO and a downgrade from Moody’s

That is a swift turn of events. Less than a year ago, the retailer announced it was accelerating a $1 billion plan to buy back its own shares to the benefit of its stockholders — cash that could just as easily been used to pay down its balance sheet or invest in its turnaround. 

Throughout much of 2022 the company has been under pressure from Ryan Cohen, the Chewy founder and GameStop chairman who took an activist stake in Bed Bath & Beyond early in 2022. Cohen fired off a screed in March slamming Bed Bath & Beyond's fizzling turnaround strategy and suggested it sell off its fast-growing BuyBuy Baby business and perhaps the entire company. 

With the retailer’s struggles continuing, Cohen’s investment firm, RC Ventures, signaled this week its intention to sell its entire stake in the company. That came just after the company’s share price rode a wave as a “meme stock,” a spike that reportedly was helped along by RC Ventures buying call options for more Bed Bath & Beyond stock — just days before the firm revealed plans to dump its stake. 

The reported hire of Kirkland & Ellis may well add to the perception of a company in trouble. The law firm, one of the most active in restructuring situations in the retail industry, is often brought in by companies grappling with financial travails. Kirkland has represented some of the largest retailers to go through Chapter 11s in recent years, including Toys R Us, J.C. Penney, Neiman Marcus and plenty of others. The era of the “retail apocalypse” has indeed been a boon for the law firm.

Of course, Kirkland also does plenty of work outside distress and retail, such as Macy’s raising new debt capital to help it through the early pandemic months. 

In a statement released around press inquiries on Cohen, Bed Bath & Beyond acknowledged it was working to address its debt. “[W]e have been working expeditiously over the past several weeks with external financial advisors and lenders on strengthening our balance sheet, and the Company will provide more information in an update at the end of this month,” the company said Wednesday in a securities filing.

For now, Bed Bath & Beyond appears to be pivoting away from some of former CEO Mark Tritton’s strategies meant to revitalize the struggling retailer. Those investors focused on fundamentals over memes have little room for near-term optimism.

“Overall, Bed Bath's weak financial position, uncertain economic environment, leadership overhaul, poor execution, and lack of clear strategy keep us cautious on the stock,” Telsey Advisory Group analysts said in a research note this week. 


Ben Unglesbee, Khareem Sudlow