Bed Bath & Beyond, the troubled retail chain, is attempting to secure product for its shelves with a new vendor consignment program. Last week, the company announced a deal with ReStore Capital, a financing arm of liquidation specialist Hilco Global, to purchase up to $120 million in “pre-arranged merchandise” from “key suppliers” on a “revolving basis” (Source: Bed Bath & Beyond). CEO Sue Gove described the program as a “capital-light solution” that could “allow us to strengthen merchandise availability and better fulfill demand.”

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The consignment deal is the latest move by Bed Bath & Beyond to stay afloat. In January, the company disclosed that its in-stock position had plummeted by 70% during the holiday season due to inventory constraints from suppliers tightening their payment terms. To raise capital, the retailer has sold stock, but it recently said it needs to raise more to stay afloat. Its credit facility has shrunk to $300 million, with only $11.5 million available to finance operations (Source: Creditntell).

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Consignment deals can come with lower operational and financial flexibility for retailers, as they don’t own the inventory on their shelves and often accept revenue share or fee agreements with vendors. Suppliers are also wary of consignment arrangements, as they fought Sears in bankruptcy court over its store closure plans once it fell into Chapter 11. Bed Bath & Beyond is still at risk of bankruptcy, which creates all sorts of risks for suppliers.

According to Creditntell’s Albert Furst, “I spoke with a dozen or so vendors last week and the vast majority have not been paid since December or earlier.” Many suppliers won’t even ship on cash-in-advance payment terms to the retailer.

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DataWeave analysis from January found that Bed Bath & Beyond’s inventory availability dropped precipitously beginning in July 2022 and worsened through the year, while levels among its peers remained stable. This has created opportunities for other retailers, such as Overstock.com, which has targeted categories that Bed Bath & Beyond.

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Sources: https://www.supplychaindive.com/news/Bed-Bath-Beyond-bankruptcy-risk-suppliers-inventory/646988/