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Bed Bath & Beyond Inc. (BBBYQ)
:BBBYQ
Risk Overview Q1, 2023
Risk Distribution
45% Legal & Regulatory
35% Finance & Corporate
15% Ability to Sell
5% Macro & Political
0% Tech & Innovation
0% Production
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.
Risk Change Over Time
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Bed Bath & Beyond Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.
Risk Highlights Q1, 2023
Main Risk Category
Legal & Regulatory
With 9 Risks
Legal & Regulatory
With 9 Risks
Number of Disclosed Risks
20
-8
From last reportS&P 500 Average: 32
20
-8
From last reportS&P 500 Average: 32
Recent Changes
12Risks added
16Risks removed
0Risks changed
Since Feb 2023
12Risks added
16Risks removed
0Risks changed
Since Feb 2023
Number of Risk Changed
0
-1
From last reportS&P 500 Average: 4
0
-1
From last reportS&P 500 Average: 4
See the risk highlights of Bed Bath & Beyond in the last period.
Risk Word Cloud
The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.
Risk Factors Full Breakdown - Total Risks 20
Legal & Regulatory
Total Risks: 9/20 (45%)Above Sector Average
Regulation3 | 15.0%
Regulation - Risk 1
A failure of our business partners to adhere to appropriate laws, regulations or standards could negatively impact our reputation.Regulation - Risk 2
Changes in statutory, regulatory, and other legal requirements at a local, state or provincial and national level, or deemed noncompliance with such requirements, could potentially impact our operating and financial results.We are subject to numerous statutory, regulatory and legal requirements at a local, state or provincial and national level, and this regulatory environment is subject to constant change. Our operating results could be negatively impacted by developments in these areas due to the costs of compliance in addition to possible government penalties and litigation, operating interruptions and reputational damage in the event of deemed noncompliance. Changes in the law or the regulatory environment, or deemed noncompliance with such laws or regulations, in the areas of customer, employee or product safety, environmental protection, privacy and information security, labor, wage and hour laws, and international trade policy, among others, could adversely impact our operations and financial results.
Our product offerings to include a selection of Owned Brands which bring additional regulatory and compliance requirements, requiring new resources and the development of new policies and procedures. Our failure to properly manage this expanded business or comply with these regulations could expose us to fines, penalties, litigation and other costs that could harm our reputation and adversely impact our financial results.
Regulation - Risk 3
We are currently out of compliance with the Nasdaq Listing Rules and are at risk of Nasdaq delisting our common stock.Added
On April 24, we received written notice from Nasdaq notifying us Company that, as a result of the Chapter 11 Cases and in accordance with the Nasdaq Listing Rules 5101, 5110(b) and IM-5101-1, Nasdaq had determined that our common stock would be delisted from Nasdaq. Trading of the Company's common stock was suspended at the opening of business on May 3, 2023. Delisting would have an adverse effect on the liquidity of our common stock and, as a result, the market price for our common stock might become more volatile. Delisting could also reduce the number of investors willing to hold or acquire our common stock and negatively impact our ability to access equity markets and obtain financing.
We expect Nasdaq to file a Form 25 with the SEC to delist our common stock from trading on Nasdaq and to remove it from registration under Section 12(b) of the Exchange Act. The delisting became effective 10 days after such filing. In accordance with Rule 12d2-2 of the Exchange Act, the de-registration of our common stock under Section 12(b) of the Exchange Act will become effective 90 days, or such shorter period as the SEC may determine, from the date of the Form 25 filing.
Following delisting from Nasdaq, the Company's common stock has been quoted in the OTC Pink Open Market under the symbol "BBBYQ". The OTC Pink Open Market is a significantly more limited market than Nasdaq, and quotation on the OTC Pink Open Market likely results in a less liquid market for existing and potential holders of the common stock to trade the Company's common stock and could further depress the trading price of the common stock. The Company can provide no assurance as to whether broker-dealers will continue to provide public quotes of the common stock on this market, or whether the trading volume of the common stock will be sufficient to provide for an efficient trading market.
Litigation & Legal Liabilities5 | 25.0%
Litigation & Legal Liabilities - Risk 1
The Chapter 11 Cases may be converted to cases under Chapter 7 of the Bankruptcy Code or one or more of the Chapter 11 Cases may be dismissed.Added
Litigation & Legal Liabilities - Risk 2
The Company has sought the protection of the Bankruptcy Court, which subjects it to the risks and uncertainties associated with bankruptcy and may harm its business.Added
The Company has sought the protection of the Bankruptcy Court and as a result our operations and ability to develop and execute its business plan, and its ability to continue as a going concern, are subject to the risks and uncertainties associated with bankruptcy. As such, seeking Bankruptcy Court protection could have a material adverse effect on our business, financial condition, results of operations and liquidity. Senior management has been required to spend a significant amount of time and effort attending to the Chapter 11 Cases instead of focusing exclusively on our business operations. Bankruptcy Court protection also might make it more difficult to retain management and other employees necessary to the success and growth of our business.
Other significant risks include the following:
- the Company's ability to create and implement a Chapter 11 plan;- the high costs of bankruptcy and related fees;- the imposition of restrictions or obligations on the Company by regulators related to the bankruptcy and emergence from Chapter 11;- the Company's ability to obtain sufficient financing to allow us to emerge from bankruptcy and execute its business plan post-emergence;- Bankruptcy Court rulings in the Chapter 11 Cases as well as the outcome of all other pending litigation and the outcome of the Chapter 11 Cases in general - the Company's ability to maintain its relationships with our suppliers, service providers, customers, employees, and other third parties;- the Company's ability to maintain contracts that are critical to its operations;- and the actions and decisions of the Company's debtholders and other third parties who have interests in the Company's Chapter 11 Cases that may be inconsistent with the Company's plans.
Delays in the Chapter 11 Cases could increase the risks of our being unable to reorganize the Company's business and emerge from bankruptcy and increase costs associated with the bankruptcy process.
Litigation & Legal Liabilities - Risk 3
We may be subject to claims that are not discharged in the Chapter 11 Cases.Added
The Bankruptcy Code provides that the effectiveness of a Chapter 11 plan discharges a debtor from substantially all debts arising prior to petition date, other than as provided in the applicable Chapter 11 plan. With few exceptions, all claims against us that arose prior to the filing of the Cases or before consummation of a Chapter 11 plan (i) would be subject to compromise and/or treatment under a Chapter 11 plan and/or (ii) would be discharged in accordance with the US Bankruptcy Code and the terms of a Chapter 11 plan. Subject to the terms of a Chapter 11 plan and orders of the Bankruptcy Court, any claims not ultimately discharged pursuant to a Chapter 11 plan could be asserted against the reorganized entities and may have an adverse effect on our liquidity and financial condition.
Litigation & Legal Liabilities - Risk 4
The Company Parties may be adversely affected by potential litigation, including litigation arising out of the Chapter 11 Cases.Added
In the future, the Company Parties may become parties to litigation. In general, litigation can be expensive and time consuming to bring or defend against. Such litigation could result in settlements or damages that could significantly affect the reorganized Debtors' financial results. It is also possible that certain parties will commence litigation with respect to the treatment of their claims under the Chapter 11 plan. It is not possible to predict the potential litigation that the Company Parties may become party to nor the final resolution of such litigation. The impact of any such litigation on the reorganized Debtors' businesses and financial stability, however, could be material.
Litigation & Legal Liabilities - Risk 5
New, or developments in existing, litigation, claims or assessments could potentially impact our reputation, operating and financial results.We are involved in litigation, claims and assessments incidental to our business, the disposition of which is not expected to have a material effect on our reputation, financial position or results of operations. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially adversely affected by changes in our assumptions related to these matters. While outcomes of such actions vary, any such claim or assessment against us could negatively impact our reputation, operations and financial results.
Taxation & Government Incentives1 | 5.0%
Taxation & Government Incentives - Risk 1
Changes to accounting rules, regulations and tax laws, or new interpretations of existing accounting standards or tax laws could negatively impact our operating results and financial position.Finance & Corporate
Total Risks: 7/20 (35%)Above Sector Average
Accounting & Financial Operations1 | 5.0%
Accounting & Financial Operations - Risk 1
The Company's ability to use net operating loss carryforwards ("NOLs") may become subject to limitation, or may be reduced or eliminated, in connection with the implementation of a Chapter 11 plan. The bankruptcy court has entered an order that is designed to protect our NOLs until a plan of reorganization is consummated.Added
Debt & Financing4 | 20.0%
Debt & Financing - Risk 1
The Debtors will be subject to the risks and uncertainties associated with the Chapter 11 Cases.Added
Debt & Financing - Risk 2
The Debtors may not be able to accurately report or timely file their financial results.Added
We have recently experienced significant turnover in our senior management team and reductions in our workforce. Our ability to retain key employees in the long-term is affected by Chapter 11 Cases and our financial situation. Our business may be adversely affected by the transitions in our senior management team and reduction in workforce, and turnover at the senior management level may create instability within the Company, which could disrupt and impede our day-to-day operations and internal controls. In addition, management transition inherently causes some loss of institutional knowledge, which can negatively affect strategy and execution, and our results of operations and financial condition could be negatively impacted as a result.
Significant turnover in our senior management team and across our organization could result in one or more material weakness in our internal control over financial reporting. However, internal controls over financial reporting may not prevent or detect misstatements or omissions in the Debtors' financial statements because of their significant turnover in senior management, inherent limitations, including the possibility of human error, and the circumvention or overriding of controls or fraud. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If the Company fails to maintain the adequacy of their internal controls, the Debtors may be unable to provide financial information in a timely and reliable manner within the time periods required under the terms of the agreements governing the Debtors' indebtedness. Further, the Debtors may discover other internal control deficiencies in the future and/or fail to adequately correct previously identified control deficiencies, which could materially adversely affect the Debtors' businesses, results of operations, and financial condition.
Debt & Financing - Risk 3
Even if a Chapter 11 plan is approved, the reorganized Debtors may not be able to achieve their projected financial results.Added
Even if a Chapter 11 plan is approved, the reorganized Debtors may not be able to achieve their projected financial results. If the reorganized Debtors do not achieve their projected financial results or are unable to procure sufficient exit financing to effectuate a Chapter 11 plan, the value of the Company's securities may be negatively affected and the reorganized Debtors may lack sufficient liquidity to continue operating as planned after the effective date. Moreover, the financial condition and results of operations of the reorganized Debtors from and after the effective date may not be comparable to the financial condition or results of operations reflected in the Debtors' historical financial statements.
Debt & Financing - Risk 4
The Debtors cannot predict the amount of time spent in bankruptcy.Added
While the Debtors have made efforts to minimize the length of the Chapter 11 Cases, it is impossible to predict with certainty the amount of time that the Debtors may spend in bankruptcy. There is a risk, due to uncertainty about the Debtors' futures that, among other things: employees could be distracted from performance of their duties or more easily attracted to other career opportunities; and suppliers, vendors, or other business partners could terminate their relationship with the Debtors or demand financial assurances or enhanced performance, any of which could impair the Debtors' prospects and ability to generate stable, recurring cash flows.
Lengthy Chapter 11 Cases also would involve additional expenses, putting strain on the Debtors' liquidity position, and divert the attention of management from the operation of the Debtors' businesses.
The disruption that the bankruptcy process would have on the Debtors' businesses could increase with the length of time it takes to complete the Chapter 11 Cases. Further, the Debtors may be forced to operate in bankruptcy for an extended period of time while they try to develop a plan of reorganization that can be confirmed. A protracted bankruptcy case could increase both the probability and the magnitude of the adverse effects described above.
Corporate Activity and Growth2 | 10.0%
Corporate Activity and Growth - Risk 1
There is no assurance that the Company will be able to successfully consummate a Chapter 11 plan, creating substantial doubt about the Company's ability to continue as a going concern.Added
Corporate Activity and Growth - Risk 2
We may not be able to obtain confirmation of a Chapter 11 plan of reorganization.Added
To complete our Chapter 11 bankruptcy process, we must meet certain statutory requirements with respect to adequacy of disclosure with respect to a Chapter 11 plan of reorganization, solicit and obtain the requisite acceptances of such a plan and fulfill other statutory conditions for confirmation of such a plan. The precise requirements and evidentiary showing for confirming a plan, notwithstanding its rejection by one or more impaired classes of claims or equity interests, depends upon a number of factors including, without limitation, the status and seniority of the claims or equity interests in the rejecting class.
Ability to Sell
Total Risks: 3/20 (15%)Above Sector Average
Competition1 | 5.0%
Competition - Risk 1
We operate in the highly competitive retail business where the use of emerging technologies as well as unanticipated changes in the pricing and other practices of competitors may adversely affect our performance.Demand2 | 10.0%
Demand - Risk 1
Our business is seasonal in nature, which could negatively affect our results of operations and financial performance.Demand - Risk 2
Our failure to anticipate and respond in a timely fashion to changes in consumer preferences and demographic factors may adversely affect our business, results of operations and financial condition.Our success depends on our ability to anticipate and respond in a timely manner to changing merchandise trends, customer demands and demographics in order to maintain and attract customers. We must continue to monitor and react to consumer expectations, such as the increased focus on environmental, social and governance ("ESG") matters, climate change, and sustainable products, and appropriately manage our brand to promote the right product lines (including our Owned Brands), drive customer loyalty and protect our reputation. Our failure to anticipate, identify or react appropriately to changes in customer tastes, preferences, shopping and spending patterns and other life interest decisions, including as a result of COVID-19, could lead to, among other things, excess inventories, a shortage of products or reputational damage, and may adversely affect our business, results of operations and financial condition.
In addition, we must manage our inventory effectively and commensurately with customer demand. Often, we need to order merchandise, and enter into contracts for the purchase and manufacturing of such merchandise, multiple seasons in advance of and frequently before customer trends and preferences are known. The extended lead times for many of our purchases may make it difficult for us to respond rapidly to new or changing trends and preferences. These extended lead times may also increase our exposure to the effects of global supply chain disruptions, increasing the risk that merchandise is not received when originally planned. As a result, we are vulnerable to demand and pricing shifts and to misjudgments in the selection and timing of merchandise purchases. If we do not accurately predict our customers' preferences and demands for our products, our inventory levels will not be appropriate, and our business, results of operations and financial condition may be negatively impacted.
Macro & Political
Total Risks: 1/20 (5%)Above Sector Average
Economy & Political Environment1 | 5.0%
Economy & Political Environment - Risk 1
General economic factors beyond our control, including the impact of COVID-19, and changes in the economic climate have materially adversely affected, and could continue to materially adversely affect, our business, results of operations, financial condition and liquidity.See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.
FAQ
What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
1. Financial & Corporate
- Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
- Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
- Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
- Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
2. Legal & Regulatory
- Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
- Regulation – risks related to compliance, GDPR, and new legislation.
- Environmental / Social – risks related to environmental regulation and to data privacy.
- Taxation & Government Incentives – risks related to taxation and changes in government incentives.
3. Production
- Costs – risks related to costs of production including commodity prices, future contracts, inventory.
- Supply Chain – risks related to the company’s suppliers.
- Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
- Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
4. Technology & Innovation
- Innovation / R&D – risks related to innovation and new product development.
- Technology – risks related to the company’s reliance on technology.
- Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
- Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
5. Ability to Sell
- Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
- Competition – risks related to the company’s competition including substitutes.
- Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
- Brand & Reputation – risks related to the company’s brand and reputation.
6. Macro & Political
- Economy & Political Environment – risks related to changes in economic and political conditions.
- Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
- International Operations – risks related to the global nature of the company.
- Capital Markets – risks related to exchange rates and trade, cryptocurrency.