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Bed Bath & Beyond Boosts Liquidity With New $850M Credit Line

By Rich Duprey – Jun 22, 2020 at 12:18PM

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The home goods retailer is shoring up its financial position as it readies to open all of its stores.

Bed Bath & Beyond (BBBY -1.68%) was already in trouble before the coronavirus outbreak, but says the "unparalleled challenge of the COVID-19 pandemic" is threatening its operations. To ensure it comes out intact on the other side, the home goods retailer announced it has vastly expanded its unsecured revolving credit facility.

The new $850 million credit line will replace Bed Bath & Beyond's existing $250 million facility, which will strengthen its balance sheet and liquidity position.

Woman looking at bedding accessories

Image source: Getty Images.

Ready for the rebound

The precarious position Bed Bath & Beyond found itself in at the onset of the pandemic was exacerbated by the forced closure of all its retail stores

CFO Gustavo Arnal stated, "An important focus as we transform our Company is to ensure liquidity and to improve cash flow generation." It was able to exit fiscal 2019 with some $1.2 billion in cash and generated $314 million in free cash flow. 

Although substantially diminished from the billion dollars a year in free cash flow it used to report, and even well below the near $600 million it ended 2018 with, Bed Bath & Beyond shows it can still generate lots of cash from its operations.

The company's turnaround hinges on selling off non-core businesses, and it is reportedly looking to sell its Christmas Tree Shops and Cost Plus World Market chains. It recently sold online properties and One Kings Lane.

The new credit facility means it has the financial wherewithal to continue down that path. It says 95% will be open by the end of the week and all of them by next month, which CEO Mark Tritton says will "strengthen our service offering and competitive position for the long term."

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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