Bed Bath & Beyond Inc. is considering tapping the private credit market to boost liquidity as the struggling retailer burns through its cash, Bloomberg News reported. Company management consulted with direct lenders about a potential new asset-based credit line. The company had about $108 million in cash and equivalents at the end of May, down from $1.1 billion a year earlier. The retailer’s talks with private credit providers are preliminary and it is still weighing other options. Bed Bath & Beyond is mired in a deep sales slump, and its bonds change hands for less than half of face value amid concerns that the retailer’s turnaround effort has stalled. Its chief executive officer stepped down in June after the company reported a $224 million adjusted loss and a glut of inventory that will need to be marked down. The retailer, based in Union, N.J., hired advisory firm Berkeley Research Group to help it focus on cash, inventory and balance sheet optimization. It also made plans to cut at least $100 million in planned capital expenditures. Supply chain disruptions and weakening consumer confidence have pressured retailers, many of which are now swamped with goods after rushing to build up inventories. Bed Bath & Beyond’s inventory was up more than 12% compared to a year earlier, while sales fell, according to its its earnings report for its first quarter, which ended May 28. The company still has room to draw on its existing $1 billion asset-based loan from JPMorgan Chase & Co., but anticipates additional needs. Chief Financial Officer Gustavo Arnal said in a June conference call to discuss earnings that the company was exploring ways “to even increase further our liquidity and navigate through the working capital cycle, particularly in the next two quarters.”
