Newell Brands President addresses elephant in the room: Bed Bath & Beyond

By Tomi Kilgore

Bankrupt retailer was an 'important customer' but risk on receivables was minimal

About 11 minutes into Newell Brands Inc.'s post-earnings conference call with analysts on Friday, Chief Executive Officer in waiting Chris Peterson addressed the elephant in the room: Bed Bath & Beyond Inc.

Newell (NWL), which is the parent of a diverse set of consumer brands, including Sharpie, Paper Mate, Graco and Rubbermaid, sold many of its products in the home-goods retailer's stores. With Bed Bath (BBBY)filing for bankruptcy last week, Wall Street was looking for a little clarity on Newell's exposure.

"While we typically do not comment on individual retailers, given they were an important customer for Newell Brands in 2022, I'll shed some light on where we stand," Peterson said. (Peterson will become CEO on May 16 as current CEO Ravi Saligram retires.)

He said Bed Bath accounted for less than 2% of Newell's sales in 2022. And given the troubles the retailer was facing, Newell moved to eliminate most of its credit exposure to the company.

But the bankruptcy still poses some risk to Newell's business, as Bed Bath winds down its business and looks to sell off assets.

"While we have minimal risk on the receivables front due to the proactive actions we've taken, we do expect this to be a slight headwind for Newell as they liquidate inventory and shoppers migrate to other retailers," Peterson said.

Don't miss: Bed Bath & Beyond closes stores nationwide. Where will the retailer's once-loyal customers shop now?

Newell's stock rose 2.3% to close Friday at $12.15, after the company reported a slightly wider-than-expected first-quarter loss but revenue that topped expectations.

The stock has lost 23.3% over the past three months while the S&P 500 index has gained 2.4%.

Keep in mind that when Sports Authority went bankrupt in 2016, sports apparel and accessories sellers like Nike Inc. (NKE) and Under Armour Inc. (UAA)(UAA) suffered, due to reduced sales and as the liquidation of Sports Authority's assets pressured margins. And toymakers like Hasbro Inc. (HAS) and Mattel Inc. (MAT)were hurt by toy seller Toys "R" Us Inc.'s bankruptcy in 2017.

-Tomi Kilgore

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05-01-23 0812ET

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