Bed Bath & Beyond
may be getting a lifeline, but Wall Street isn’t convinced that it will be enough to save the company.
The troubled retailer is in exclusive talks with asset manager Sixth Street Partners to secure a $400 million loan to strengthen its balance sheet, according to sources close to the matter. The possible financing comes after Bed Bath & Beyond (ticker: BBBY) burnt through more than $300 million in cash and borrowed $200 million during its fiscal first quarter, which ended on May 28.
Bed Bath & Beyond shares initially soared 18% Wednesday after The Wall Street Journal reported on the financing discussions. But some of the air was let out of that rally after investors questioned whether the cash infusion would be enough to help the company complete its long-awaited turnaround.
The retailer’s shares were trading Friday at $10.62, down 4.7% for the week, an especially volatile one that included the aftermath of activist investor Ryan Cohen exiting his position in the company.
While Wall Street is uncertain about Bed Bath & Beyond’s future, Sixth Street has experience in investing in complex situations. It has used its $60 billion war chest to lend to
(DBI) and DSW.
At the very least, the cash can buy Bed Bath & Beyond time to implement turnaround measures, such as closing stores and renegotiating vendor contracts. Whether those efforts would be sufficient is less certain.
Bed Bath & Beyond, which will update investors on an Aug. 31 call, did not respond to Barron’s requests for comment. Sixth Street reps declined to comment.
Write to Carleton English at [email protected]