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Bed Bath & Beyond (NYSE: BBBY) is trading sharply lower today after the company provided a business update. Along with predicting a massive loss in the fiscal third quarter of 2022, BBBY also flagged concerns over its ability to continue as a going concern.

In its release, Bed Bath & Beyond said that it expects to post revenues of $1.259 billion in the fiscal third quarter than ended on November 26. To put that in perspective, it posted revenues of $1.878 billion in the corresponding quarter last year.

It attributed the fall in revenues to low inventory levels and a fall in customer traffic at the stores.

It expects to post a net loss of $385.8 million in the quarter as compared to a net loss of $276.4 million in the third quarter of the fiscal year 2021. In the quarter, Bed Bath & Beyond expects an impairment loss of $100 million.

Meanwhile, it expects the SG&A (selling general and administration) expense to fall to $583.6 million in the quarter as compared to $698 million in the corresponding quarter last year.

Bed Bath & Beyond is taking several measures to restructure the business but as the perennial losses show, they are falling short.

Bed Bath & Beyond Was Once a Meme Stock Darling

There has been an exodus of top executives also and in November its chief technology and chief consumer officers resigned. In June, the company’s board fired its CEO Mark Tritton from the position as activist investors pushed for change.

Once a meme stock darling, Bed Bath & Beyond is now out of favor with markets. In August last year, Ryan Cohen who is helping revive GameStop, sold all his Bed Bath & Beyond shares. BBBY stock plunged after the news.

Meanwhile, in its business update, Bed Bath & Beyond CEO Sue Gove highlighted the turnaround plan. She said, “Our plan has two anchors: the first enables us to refocus merchandising and inventory, operate more efficiently, and grow our digital and omni-capabilities, and the second focuses on strengthening our financial position.”

BBBY is Transforming Its Business

She however cautioned that transforming an organization of BBBY’s size would take time. She added that the company is now looking to restock inventory from the liquidity it generated from the holiday sales.

Gove added, “We are resetting foundational elements to create a stronger and more nimble infrastructure that aligns closely with customer demand and preference.”

She also said, “We continue to manage our financial position amidst a changing landscape and work with expert advisors as we consider all paths and strategic alternatives to accomplish our short- and long-term goals.”

Bed Bath & Beyond also filed to delay its quarterly earnings report as it needs time to test its assets for impairment.

Bed Bath & Beyond Flags Bankruptcy Risks

Meanwhile, Bed Bath & Beyond also flagged bankruptcy risks in its business update.

It said, “While the Company continues to pursue actions and steps to improve its cash position and mitigate any potential liquidity shortfall, based on recurring losses and negative cash flow from operations for the nine months ended November 26, 2022, as well as current cash and liquidity projections, the Company has concluded that there is substantial doubt about the Company’s ability to continue as a going concern.”

The company’s business update has spooked investors and the stock is down almost 20% in US premarkets today.

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