Analyst Note| Jaime M. Katz |
With no-moat Bed Bath & Beyond finally filing its third-quarter 10-Q on Jan. 26, additional insight surrounding the firm’s financial duress has been shared. Most importantly, it was noted that on Jan. 13, the firm defaulted on its credit facilities, resulting in both more costly debt service and the acceleration of repayment. At the end of the third quarter, Bed Bath had $925 million outstanding across its two asset-based facilities (now represented in short term debt), along with $186 million in letters of credit and with $1 billion in senior notes. However, with just $154 million in cash and equivalents at the end of the third quarter and limited resources for liquidity, we believe time is running out for Bed Bath as a public equity. The company burned more than $300 million in cash from operations in the quarter and nearly $900 million year to date through November, indicating no headway has been made in remedying weak profitability of the business.