Bed Bath & Beyond (BBBY) stock fell as much as 11% after the struggling retailer said it would sell up to $300 million in shares and posted preliminary fiscal fourth quarter sales results, missing analyst expectations.
The company posted net sales of $1.2 billion, below Wall Street estimates of $1.43 billion. Comparable sales declined in the range of 40-50% for the three months ending February 25.
The net proceeds of the stock offering will be used for its credit facility, for initiatives such as “investing in merchandise inventory, which will be further supported by a realigned store footprint and cost structure.”
“The actions we’ve taken have enabled us to create the necessary financial runway to begin restoring our iconic Bed Bath & Beyond and buybuy BABY businesses,” Sue Gove, president & CEO of Bed Bath & Beyond, said in a statement.
In February, the ailing home goods retailer secured $1.025 billion in funding from an equity offering. That move was seen as a Hail Mary pass to stay in business, sending the stock stock down 43% in one day.
In Thursday’s announcement, the company said it “is terminating its previous public equity offering and all outstanding warrants for Series A Convertible Preferred Stock associated with that offering.”
Hudson Bay Capital Management walked away from its deal with Bed Bath and Beyond amid the retail chains rapidly declining stock price. The hedge fund, which had previously agreed to keep buying shares of Bed Bath & Beyond at prices lower than initially agreed to, had become increasingly concerned about the low stock price ahead of the next round of funding in early April, according to a source.
Bed Bath & Beyond has been a meme stock favorite over the past couple of years. The company is considering a reverse stock-split in the ratio range of the 1-for-5 or 1-for-10. The split would drive up the value of shares and perhaps reinvigorate retail interest in the stock. Short interest on the stock is incredibly high, at more than 70% of the float.
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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