Bed Bath & Beyond warns of potential bankruptcy

Bed Bath & Beyond is running out of cash and may have to file for Chapter 11.

The retailer warned that it likely wouldn't have the cash to cover expenses in the upcoming months, citing worse-than- expected sales. The company said it's looking at financial options as well as a possible bankruptcy.

The company's shares plummeted in premarket trading after they issued the updates.

Bed Bath is having difficulty getting enough merchandise to fill its shelves and is drawing fewer customers to its stores and website.

Less than a month after notifying investors it planned to raise new debt in order to pay off chunks of existing debt, the retailer said it couldn't refi a portion of its debt.

Bed Bath has a large amount of debt. The maturities of the Unsecured notes are spread out over the next three decades. Bed Bath has warned that it has been burning through cash.

The notes of Bed Bath have been trading below par.

Bed Bath has been through a lot in the last few months, with the departure of its CEO and other top executives and store closings. Mark Tritton was pushed out of his position in June. Sue Gove has been the permanent CEO.

She laid out a plan for a comeback. She said that the company would cut costs by downsizing its workforce. She said it would add more items from popular national brands. She said it had secured more than half a billion dollars in new financing.

During its last earnings report, the company said it had enough money to move forward.

Gove said in a news release that recent sales results show why the plan is important.

She said that it takes time to transform an organization of their size and scale.

Sales trends have not changed at Bed Bath. Net sales in the third quarter are expected to be less than a year ago.

It expects a net loss of $385.8 million for the third quarter, a 40% increase over the same period a year ago. A $100 million impairment charge was included in the quarter's losses.

The earnings call will take place on Tuesday.

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