Dive Brief:

• Bed Bath & Beyond reached a new vendor consignment agreement with Hilco Global’s ReStore Capital under which ReStore will buy up to $120 million of products from the key suppliers to supplement the struggling home goods retailer’s inventory levels, according to a company release Wednesday.
• Sue Gove, Bed Bath & Beyond president and CEO, said the company was still seeing support from top suppliers as the company continues to pursue its turnaround. "We remain relentless in executing plans that can help us overcome near-term operational and financial challenges,” Gove said in the release. “This capital-light solution can allow us to strengthen merchandise availability and better fulfill demand."
• The Union, N.J.-based company is facing challenges on many fronts, including in its efforts to keep shelves filled, with one executive noting on a Jan. 9 earnings call that micro and macroeconomic challenges led to lower in-stock levels in the 70% range which hurt sales, according to a SeekingAlpha transcript.

Dive Insight:

Bed Bath & Beyond  — which warned in January that there was substantial doubt about its ability to continue as a going concern — has sought to stave off bankruptcy by raising cash and slashing costs through closing stores and cutting staff. 

Its latest inventory initiative comes as it also announced a special meeting of shareholders on May 9 to consider a reverse stock split of the company’s common stock at a ratio in the range of 1-for-10 or 1-for-20, with the ratio to be determined by the board, according to Wednesday company filing with the Securities and Exchange Commission.  

Companies often pursue a reverse stock split to raise the stock price. Bed Bath & Beyond’s shares fell 8.28% Thursday to close at $0.3092, well below the $21 range the stock traded in one year ago.

Morningstar analysts wrote last month that they still expected the company would eventually declare bankruptcy despite the fact that it has been successful in raising capital in creative ways, CFO Dive previously reported. 

Asked in an email from CFO Dive whether the inventory agreement was a lifeline aimed at filling empty shelves or a step toward a wholesale restructuring, Morningstar senior analyst Jaime Katz wrote she “wasn’t sure about the logic” of the deal. “I suppose it buys them some time to operate, try to get the reverse stock split, try to find a capital infusion (unlikely),” Katz wrote on Thursday, adding that she still anticipated that the retailer would ultimately end up in bankruptcy.

The Wall Street Journal reported in January that Hilco, an advisory firm that specializes in restructuring and liquidations, was in talks with Bed Bath & Beyond to potentially provide capital to pay vendors. 

Bed Bath & Beyond did not immediately respond to requests for additional comment on the agreement with Hilco and Northbrook, Illinois-based Hilco did not respond to requests for comment. 

Bed Bath & Beyond is also facing legal action stemming from layoffs. A former store manager filed a lawsuit last month saying the company failed to give proper notice of mass layoffs and a complaint was filed by former Bed Bath & Beyond CEO Mark Tritton who sued the company accusing the retailer of cutting off bi-monthly payment of his severance agreement in January, according to Industry Dive sister publication Retail Dive.  

Last year the company also grappled with the loss of its CFO. In September the death by suicide of then Bed Bath & Beyond’s CFO Gustavo Arnal sent shockwaves across Wall Street and raised issues around mental health care in the C-suite and the rising pressures challenging even the most battle-tested finance leaders.