“American IKEA” Bed Bath & Beyond Declares Bankruptcy and Closes Stores – Shares Plummet by 52%

Shares of “American IKEA” collapsed by 52% after the news of bankruptcy

The company announced it filed for bankruptcy last weekend. It is planned that stores will sell the remaining goods, after which they will close.

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Quotes of the Bed, Bath & Beyond chain of home goods stores, as of 11:03 Moscow time, have fallen by 52.3%, to $0.14. By 11:55 Moscow time, the decline slowed down to 37.45%, the price of one share of the American analogue of IKEA was $0.18, according to trading data on the NASDAQ exchange.

Shares tumbled after the retailer on Sunday, April 23, announced it was filing for bankruptcy. It is planned that 360 Bed Bath & Beyond stores and 120 Buybuy Baby stores will sell out the remaining goods, after which the outlets will close. The shops themselves will also be put up for auction.

Investment firm Sixth Street has agreed to provide Bed, Bath & Beyond with about $240 million in collateral to enable it to operate as part of the bankruptcy process.

“Bed, Bath & Beyond has finally come to terms with the fact that its business has been destroyed and has filed for bankruptcy.” leads CNBC commentary by retail analyst and managing director of GlobalData consulting firm Neil Saunder.

The retailer warned about the risk of bankruptcy in early January of this year, after which the shares collapsed by almost 25%. During the last months of Bed, Bath & Beyond tried to receive financing, however, the amount of funds raised was several times less than the company itself had planned. In particular, at the end of March the company announced plans to place shares for $300 million, but the market reacted negatively to this news. As of April 10, Bed, Bath & Beyond has only raised $48.5 million of its $300 million target.

From its IPO in 1992 until 2019, the company has remained profitable. At its peak in 2014, the share price exceeded $80.8. However, in the future, the development of online commerce and the emergence of giants such as Amazon led to a reduction in the market share of Bed, Bath & Beyond. From their highs in 2014, quotes have collapsed by more than 99%.