Bed Bath & Beyond, the struggling US retailer, announced on Friday that it would be seeking shareholder approval for a reverse stock split, leading to a 13% drop in its shares during extended trading. The company is planning to hold a special meeting on March 27 to decide on the split ratio, which is expected to range from 1-for-5 to 1-for-10, with the final ratio to be determined by the board.
The move to reverse stock split comes as the company seeks to regain investor confidence after a string of disappointing earnings reports and a slump in its share price. A reverse stock split would reduce the number of shares outstanding, thereby increasing the price per share, which could potentially make the stock more attractive to institutional investors.
However, reverse stock splits are often viewed as a sign of weakness by investors, as they can indicate that a company is struggling to maintain its share price. In the case of Bed Bath & Beyond, the company has been struggling to compete with e-commerce giants like Amazon, and has been facing declining sales and profits in recent years.
Despite the challenges faced by the retailer, Bed Bath & Beyond’s CEO, Mark Tritton, remains optimistic about the company’s future prospects. In a statement, he said that the reverse stock split was just one part of a broader strategy to position the company for long-term success.
“We remain confident in the strength of our business and the opportunities ahead of us,” Tritton said. “Our focus remains on executing our strategy to drive sales growth and operational efficiency, while continuing to invest in our people, our stores, and our digital capabilities.”
In addition to the reverse stock split, Bed Bath & Beyond has also been taking other steps to turn its fortunes around. The company has been investing heavily in its e-commerce platform and expanding its product offerings, while also working to improve the in-store experience for customers.
Whether these efforts will be enough to reverse the company’s fortunes remains to be seen. However, the move to seek shareholder approval for a reverse stock split is a clear indication that Bed Bath & Beyond is willing to take bold steps to address its challenges and position itself for long-term success.
The announcement of the reverse stock split also comes amid broader volatility in the stock market, as investors grow increasingly concerned about the possibility of a global economic slowdown. The S&P 500 has fallen by around 8% since the start of the year, as fears about the impact of the coronavirus outbreak on the global economy continue to weigh on investor sentiment.
In this context, it is likely that many investors will be closely watching the outcome of Bed Bath & Beyond’s special meeting later this month, as they seek to gauge the retailer’s prospects for the future.