Wells Fargo Believes Bed Bath and Beyond Bankruptcy Filing May Be Imminent

Bed Bath & Beyond (NASDAQ: BBBY) issued a warning about its future on Thursday, stating that a bankruptcy filing is a possibility for the company.

“There is substantial doubt about the company's ability to continue as a going concern,” the struggling retailer said in a press release, with its worsening financial situation continuing.

As a result, BBBY said it is exploring strategic alternatives, including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying its business activities and strategic initiatives, or selling assets, or other measures, including “obtaining relief under the US Bankruptcy Code.”

The news resulted in the company's shares plummeting, closing the session at $1.69, down 29.88%.

The company also said that in its fiscal third quarter, it expects to report net sales of approximately $1.26 billion compared to $1.88 billion in the year-ago period. This reflects lower customer traffic and reduced levels of inventory availability, the company said.

While Sue Gove, President &and CEO of Bed Bath & Beyond, said they have a clear vision for the future of the company, Wells Fargo analyst Zachary Fadem said “a bankruptcy filing could be imminent.”

The “writing has been on the wall for some time,” said Fadem in a research note, adding that the company's preliminary Q3 results were “well below” consensus. The analyst lowered the firm's price target on Bed Bath & Beyond to $1 from $2, maintaining an Underweight rating on the stock.