What’s ahead in wake of bankruptcy warning

When Bed Bath & Beyond leaders speak to investors Tuesday morning, they won’t simply report sales and earnings results. They will have to address a stark reality: The cash-strapped home goods retailer is running out of time.

On Thursday, Bed Bath warned it may have to file for bankruptcy, saying that it could soon be unable to cover costs as sales lag and store traffic dwindles. It also said it’s struggling to keep items in stock, as it runs low on cash and works to remedy strained relationships with suppliers.

The nationwide chain, known for its 20% coupons and sky-high piles of towels and housewares, is increasingly at risk of joining the list of retailers that have shuttered stores and faded away. Think, Sears. Circuit City. RadioShack. Pier 1. Linens ‘n Things.

What’s more, the attempted turnaround comes at the same time that inflation weighs on consumers’ wallets and as the housing market gets hit by higher interest rates. Plus, after spending the earlier years of the pandemic at home, more people are choosing to spend money on dining out or booking trips rather than buying cookware, a duvet or throw pillows.

“When you have a shift in how consumers are allocating their spending, and a recession looming potentially on the horizon, it makes it much more of an uphill battle,” said Justin Kleber, senior research analyst at Baird Equity Research.

The company’s stock performance reflects its tough path forward, too. Shares of the company touched a 52-week low on Friday. As of early Monday, shares were trading around $1.74 for a market value of less than $151 million.

Bed Bath laid out its latest turnaround plan in August. The plan called for drastic cost cuts in the way of closing about 150 of its namesake stores and reducing its head count by about 20% across its corporate and supply chain workforce.

Those efforts have brought its operating costs down, as it tries to drive up sales: For the third quarter, Bed Bath expects operating expenses to be about $583.6 million, compared with about $698 million in the year-ago period, it said Thursday.

The company’s turnaround strategy also involved phasing out some of its private labels and bringing back more well-recognized national brands. It pledged in August to work with those national brands to develop exclusive items and to add items from direct-to-consumer brands — merchandise aimed at setting it apart and giving shoppers a reason to come back to its stores.

Come Tuesday, investors will want to hear if the company has improved its inventory levels, if they managed to secure any exclusive items for the holiday season and how willing vendors have been to work with the retailer. If Bed Bath has made significant inroads in improving inventory, it could offer a glimmer of hope for the quarters ahead.

“Being the first to bring new brands and products to our customer has always been…