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The coming holiday season is likely to test a number of midsize retailers that have seen sales slump as inventory piles up, a crux that could leave the most seriously stressed light on the cash needed to stay afloat, the Wall Street Journal reported. Home-goods and furniture chains Bed Bath & Beyond Inc., Tuesday Morning Corp. and the privately owned At Home Group Inc. have secured additional capital to help them survive what could be a rocky holiday season. And apparel chain Rue21 Inc. said it completed a financing deal last week. Retailers that enjoyed robust sales and profits last year as customers returned to in-store shopping were caught off guard as inflation kicked in and sales quickly eroded. Americans also shifted more of their spending to services and travel, pastimes that were off-limits in the early days of the pandemic. At the same time, retailers from Macy’s to Target Corp. have been discounting furiously to work off a glut of merchandise—undercutting smaller retailers where their offerings overlap. “Not only are many retailers overextended on inventory, but now they are facing softening demand,” said Tero Janne, managing director and co-head of debt advisory services at Solomon Partners.

Bed Bath & Beyond Inc. made a debt-exchange offer as the home-goods chain looks to ease its financial burdens amid a sales drop, the Wall Street Journal reported. The series of exchanges will help extend debt maturities and reduce interest expenses, the retailer said on Tuesday in a filing with the Securities and Exchange Commission. As part of the offer, the existing bonds maturing 2024 will be exchanged for new second-lien secured notes due in 2027. Holders have an option to receive new notes at par for a lower 3.693% coupon, or take a 59% haircut on the principal for new debt that is convertible into equity with a higher 8.821% interest, according to the filing. The unsecured notes maturing in 2034 and 2044 are offered to be exchanged for new third-lien debt carrying a 12% interest rate. Holders that accept the offer will take a roughly 78% discount to the face value. Holders of the bonds have until Nov. 15 to accept the offers. “We believe this transaction will put us in a stronger financial position going forward by significantly reducing our debt and interest expense upon a successful completion,” said interim Chief Executive Sue Gove. S&P Global Ratings said it considered the debt exchanges as “tantamount to a default” because the noteholders will receive less than they were originally promised. The ratings company cut Bed Bath & Beyond’s credit rating further to a level where, while default has not yet occurred, it is “expected to be a virtual certainty.” On Tuesday, Bed Bath & Beyond’s 2024 notes traded at 31.25 cents on the dollar and the notes due in 2034 last changed hands at 15 cents on the dollar, according to data compiled by the Financial Industry Regulatory Authority.

Volume woes at U.S. railroad operators are set to spill into next year as labor shortages continue to hurt the sector that is critical in connecting consumers with businesses and finished goods, according to analysts, Reuters reported. U.S. railroads have come under criticism from regulators and shippers for staffing cuts in pursuit of a leaner operating model that boosted profitability, but affected rail services. "While the labor environment does appear to be incrementally improving over the last several months, it will still take some time to see meaningful service improvement," Wells Fargo said. Railroad profits will be under further pressure from investments in service and U.S. union pay hikes through 2024, according to Susquehanna. The North America railroad industry has also been under scrutiny for working conditions. The Biden administration last month secured a tentative deal between railroads and unions to avert a railway strike that could have wreaked havoc on the U.S. economy.

The Federal Trade Commission is investigating whether Visa Inc. and Mastercard Inc.’s security tokens restrict debit-card routing competition on online payments, the Wall Street Journal reported. The FTC for the past few years has already been probing whether Visa and Mastercard block merchants from routing payments over other debit-card networks. The networks acknowledged an FTC probe in regulatory filings in recent years. In recent months, the FTC expanded its focus to routing challenges that stem from the networks’ security tokens, the people familiar with the matter said. It couldn’t be determined if the investigation is a new probe or part of the previous one. Visa and Mastercard are by far the two biggest card networks in the U.S., building and maintaining the plumbing that allows Americans to use credit and debit cards at stores and online. Their lion’s share of that market has drawn increasing scrutiny from regulators and fueled tension with merchants, which pay fees set by the networks when a customer pays via card. A Justice Department investigation on whether Visa has unlawfully maintained a dominant market share in debit cards is ongoing. Federal law requires that merchants have the ability to choose from at least two unaffiliated debit-card networks to route transactions. That is supposed to give merchants the option to send debit-card payments over the network that sets lower fees.

Retail sales were flat in September, according to data released Friday by the Census Bureau, a potential sign of American consumers buckling under high inflation, The Hill reported. Retailers and restaurants made $684 billion in sales last month after seasonal adjustments, unchanged from August’s retail sales total. Sales rose 0.4 percent in August before flattening out last month, according to the Census Bureau. Retail sales figures are not adjusted for inflation, which means the data tracks the total level of spending on retail goods and services, but not the amounts of goods and services purchased. The September slowdown in retail sales came as prices rose 0.4 percent on the whole last month and 8.2 percent over the past year, according to Labor Department data released Thursday.

A trustee for Tops Friendly Markets creditors can move forward with a lawsuit against Morgan Stanley and other company backers over dividends paid before the grocery chain filed for chapter 11, WSJ Pro Bankruptcy reported. The creditors filed the claims in 2020 against Morgan Stanley Investment Management and other former owners of Tops, alleging the private-equity owners paid themselves $375 million in dividends while leaving Tops insolvent, unable to cover its debts and pension obligations. Bankruptcy Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., on Wednesday declined to dismiss the lawsuit, saying the trustee made a plausible argument to support the case despite the private-equity owners’ objections. The judge went beyond the Tops case to comment on how the Bankruptcy Code allows private-equity owners to “loot privately-held companies to the detriment of their non-insider creditors with effective impunity.” The lawsuit alleged that the private-equity owners made four separate dividend payments to themselves worth hundreds of millions of dollars while they were aware the company’s pension plans were significantly underfunded. The first $105 million paid out in October 2009 was made when the company was insolvent, the lawsuit said.

Bed Bath & Beyond Inc.’s bondholders are organizing, looking to protect their investments in the struggling retailer as it looks for ways to ease its debt during a slump in sales, WSJ Pro Bankruptcy reported. Financing adviser Perella Weinberg Partners is working with holders of Bed Bath & Beyond’s unsecured notes due in 2024 ahead of debt talks expected to be held with the company. Bed Bath & Beyond said in its second-quarter results last week that it is considering launching a distressed exchange that would swap the outstanding bonds for new, longer-tenured debt or equity in the company, based on their trading prices. But the transactions could take other forms or might not be launched at all, the company said in a securities filing last week. Bed Bath & Beyond didn’t respond to a request for comment Monday. Bondholders are wary about a potentially coercive exchange deal that raises new secured debt but weakens other creditors’ claims on Bed Bath & Beyond’s assets. The company said last week that it had liquidity of about $850 million as of September, reflecting new loans it secured from its banks and from Sixth Street Partners after the quarter ended.

New vehicle sales in the U.S. are expected to have fallen slightly in the third quarter, even with improvement in September. But there are warning signs that consumers’ appetite for expensive new cars, trucks and SUVs may be waning, the Associated Press reported. Edmunds.com says it expects sales to have fallen just under 1% in the period from July through September when the numbers from automakers are totaled up on Monday. Multiple companies reported sales declines for the quarter, with General Motors as a notable exception. However, many said that sales rose in September as shortages of computer chips and other parts started to ease and auto factories were able to produce more, increasing vehicle supplies. But any monthly gain may be short lived due to high prices and rising interest rates. Last month, new auto prices averaged $45,622, the fourth-highest monthly price on record, according to J.D. Power. In addition, auto loan interest rates hit 5.7% between July and September, up from 4.3% a year ago, with terms stretched to average over 70 months, Edmunds said. Still, General Motors managed to lead the industry for the quarter, selling more than 555,000 vehicles, a 24% increase over last year. The company said it saw improved semiconductor supplies, more stable production and increased inventory on dealer lots during the quarter.