Shares of Bed Bath & Beyond plunged 25% as the retailer went bankrupt

LONDON (Reuters) – Shares of Bed Bath & Beyond Inc (BBBY.O) fell nearly 25 percent on Monday after the household goods retailer’s long battle to save its business ended in bankruptcy.

The once high-flying company filed for bankruptcy protection Sunday and said it had begun a liquidation sale after failing to secure the funds to stay afloat.

Bed Bath & Beyond also plans to use Chapter 11 proceedings to seek outside buyers who can keep the business going or purchase separate assets such as the company’s 125 children’s goods stores that operate under the buybuy Baby brand.

The company received permission from a US bankruptcy judge on Monday to borrow $40 million to stabilize its operations and buy time for an orderly sale.

A failed marketing strategy, lower spending by inflation-hit Americans, and stiff competition from rivals such as TJX’s TJ Maxx (TJX.N) and Target Corp. (TGT.N) sent the business into a tailspin as losses mounted and cash ran out.

“It was deteriorating before COVID, and COVID pushed it over the edge. He mismanaged it during COVID, using leftover money to buy back shares in exchange for keeping respectable in-store inventory that attracts customers,” said Thomas Hayes, chairman and managing member at Great Hill Capital.

But the fall of Bed Bath is not seen as a sign of weakness in the broader retail sector. Analysts said some companies, including Walmart Inc (WMT.N), Amazon.com Inc (AMZN.O), Target and Williams-Sonoma Inc (WSM.N), will earn a share and marginal revenue benefit.

On Monday, Bed Bath & Beyond was the second most active stock on Stocktwits, a site popular with retail investors.

Its bonds due in 2024 remained under pressure, dropping nearly $3 on Monday and pushing yields to a record high of more than 450%.

US shares in the company pared some pre-market losses to trade at 21 cents.

Pied Bath also appointed interim Chief Financial Officer Holly Itlin as its new Chief Financial Officer. Etlin, a bankruptcy expert, will oversee the liquidation and sale.

(Reporting by Joyce Alves). Editing by Amanda Cooper

Our standards: Thomson Reuters Trust Principles.