Major retailers have been in financial turmoil after COVID, but at least one of them will live to see another day. Bed, Bath, & Beyond has $1 billion in funding to ensure that its employees will continue to have jobs. However, the overall market for mall retailers remains questionable after COVID. The company has secured $225 million in funds and another $800 million to be paid over time. The company defaulted on a $25 million loan to JP Morgan. The funds will be used to repay the loan and invigorate the retailer’s dwindling market.
As part of the agreement, BB&B will be downsizing considerably moving forward. This includes reducing their overall number of brick-and-mortar stores to no more than 480, with 120 of those stores being Buy Buy Baby.
BB&B has already closed 200 stores, and another 150 stores are on the way. As of last year, the retailer had nearly 1000 stores open. BB&B hopes that the cash infusion will help the company continue its turnaround. But it remains unclear that retailers, especially those that are struggling, can survive a modern economy built around Doordash and Amazon. Many experts believe that the situation has only forestalled the inevitable, and liquidation is the future of failing retail giants like Bed, Bad, & Beyond.
Is it a Good Deal for Investors?
It gives Bed, Bath, & Beyond a little breathing room to pay down debts and rebuild. The question that remains is whether or not the foundation of retail is strong. With the economy in turmoil, Americans living check-to-check, and the cost of living skyrocketing, there is not a lot of disposable income to go around. While the money might keep the company out of bankruptcy, chances are good that no shift in momentum will occur.
Meanwhile, it is not just BB&B that has troubles. Americans as a whole are dealing with mounting debt, escalating costs, higher food prices, and higher gas prices, and simply do not have enough disposable income to devote to bath bombs and other luxuries. So, the financial pinch that is being felt by consumers hurts the retail market as Americans are less likely to go shopping when they cannot afford food and utilities.
Since the economy is interconnected, higher costs of necessities eat into luxuries and entertainment. For those industries to survive, Americans must have disposable income to spend. If they do not, then these industries will be the first hit by the financial pinch.
COVID took its toll on the U.S. economy, and we are still feeling the aftershock. It may be that the economy changes forever from here, and retail giants like BB&B will need to change in order to meet the needs of a changing nation.
Talk to an Indiana Bankruptcy Attorney Today
Chris Arrington helps Indiana residents who are currently in the same position as Bed, Bath, & Beyond. Call today to schedule a free consultation, and we can begin discussing your next moves immediately.