BBBYQ Stock: Bed Bath & Beyond Faces $1.29 BILLION in Impairment Charges

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Bed Bath & Beyond (OTCMKTS:BBBYQ) may trade over the counter now, but that doesn’t mean BBBYQ stock isn’t making news. The most recent headline to hit? A $1.29 billion impairment charge.

The retailer recently released its full-year results for the fiscal year ending Feb. 25. While Bed Bath & Beyond actually released its unaudited fourth-quarter results in March, this is the firm’s full-year final results.

Among the results, a huge dip in sales stands as out, as does the aforementioned impairment charge. The company said its restructuring and transformation initiatives led to a total expense of $407.7 million. Further, Bed Bath & Beyond said:

“We also recorded impairment charges of approximately $1.29 billion, primarily related to store assets. At this point, we are unable to estimate the amount or range of amounts expected to be incurred in connection with future restructuring and transformation initiatives, including further store closures, and will provide such estimates as they become available.”

An impairment charge is “a process used by businesses to write off worthless goodwill.”

Despite all of this, BBBYQ stock is up about 5% on the day.

Where Does BBBYQ Stock Go From Here?

Store closures during the year helped fuel a depletion in revenue. Overall, revenue fell to $5.34 billion in sales this year, down about $2.5 billion, or 32%, versus 2021. Diving deeper into those numbers, store sales fell $1.55 billion, while e-commerce sales fell by more than $977 million.

Put simply, Bed Bath & Beyond’s business fell apart and the trends led to its demise. Store closures, falling traffic, poor inventory management and other factors ultimately led to BBBY turning into BBBYQ stock.

Now Overstock (NASDAQ:OSTK) has entered the discussion. The company has emerged as the stalking horse bidder in Bed Bath & Beyond’s bankruptcy proceedings. Reports suggest that Overstock is offering $21.5 million in cash for the deal.

Specifically, Overstock is bidding for Bed Bath & Beyond’s IP, “including the rights to collect royalties and other proceeds and payments in connection [to] the business.” It also includes the retailer’s internet and mobile properties, data, marketing materials and other assets of the business.

While Bed Bath & Beyond was a favorite for momentum traders, short-sellers were the ones who were paid out this year after the firm went bankrupt.

The retailer tried for a last-ditch deal, but it didn’t pan out. Even if it had worked out, it would have only bought Bed Bath & Beyond time and would have been unlikely to change its final outcome.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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