Struggling Bed Bath & Beyond is pulling the plug on its Harmon beauty products chain as well as shutting nearly 100 of its banner stores and Buy Buy Baby locations, on the heels of its already announced 150 closings and a warning that it could make a filing for bankruptcy protection.
The Union, New Jersey-based home goods retailer on Friday confirmed that it will be closing all its Harmon locations, about 50 stores. Bed Bath & Beyond has also initiated the closure of an additional 87 Bed Bath & Beyond and five Buy Buy Baby stores, according to a company spokeswoman. That's a total of 142 stores, representing yet another reduction of the retailer's physical footprint, and a doubling of scheduled store closings.
"This store fleet reduction expands the company’s ongoing closure program of approximately 150 lower-producing Bed Bath & Beyond banner stores," the spokeswoman said in an email to CoStar News.
The shutdown of the entire Harmon chain was first reported by Yahoo! Finance, and comes in the wake of the retailer defaulting on debt payments.
In a third-quarter earnings call this month, parent company Bed Bath & Beyond reported that it had 949 stores, including 762 Bed Bath & Beyond locations, 137 Buy Buy Baby stores and 50 Harmon stores. At that time, the retailer released an updated, and nearly complete list, of the 150 closures it had done or was in the process of doing in a cost-cutting effort. The majority of the sites were Bed Bath & Beyond stores, but there was also two Harmon and six Buy Buy Baby stores slated to be shut on that list.
Bed Bath & Beyond is reporting deeper financial concerns after it warned investors it could head to bankruptcy court with a Chapter 11 filing. The company has already said its rescue efforts may fail.
Debt Payment Default
The retailer, faced with plummeting sales after making strategic shifts that didn't pan out with shoppers, earlier this week in a regulatory filing said it had defaulted on certain debt payments. The default notice came from lender JPMorgan Chase.
"At this time, the company does not have sufficient resources to repay the amounts under the credit facilities and this will lead the company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code," Bed Bath & Beyond said it its filing with the Securities and Exchange Commission.
"The company is undertaking a number of actions in order to improve its financial position and stabilize its results of operations including but not limited to, cost cutting, lowering capital expenditures, and reducing its store footprint including related distribution centers," Bed Bath & Beyond said.
The company added that "in addition, the company will continue to seek reductions in rental obligations with landlords in its determination of the appropriate footprint, seek additional debt or equity capital, reduce or delay the company's business activities and strategic initiatives, or sell assets. These measures may not be successful."
The retailer's efforts to find an acquirer in a bankruptcy proceeding, for its Buy Buy Baby chain in particular, has so far failed, Bloomberg News reported on Friday.
"As we consider all paths and strategic alternatives, we continue to work with our advisers and implement actions to manage our business as efficiently as possible," the Bed Bath & Beyond spokeswoman said. "We will update all stakeholders on our plans as they develop and finalize."