Bed Bath & Beyond Inc., short on cash and time, is trying to have its Best Buy moment.

While many US retailers’ attempts at a turnaround have failed in recent years, Best Buy Cos.’s is one of the few that’s succeeded. The electronics chain overcame relentless online competition and management missteps to regain its stature during the past decade. It stands out as an example for Bed Bath & Beyond, where executives are betting on a plan that includes more debt financing, issuing shares, cutting costs and revamping merchandise.

The home-goods retailer announced Thursday it had secured more than US$500 million of new financing. The company is pledging to increase its sales and recapture market share, much as Best Buy did. 

Best Buy is “the one poster child for a retail turnaround,” said Cristina Fernandez, a Telsey Advisory Group analyst. Among big-box stores that operate with tight profit margins, Best Buy was able to win back customers, strengthen frayed relationships with vendors and improve e-commerce, Fernandez said. “Today, they are considered a strong and high-quality retailer.”

Best Buy achieved that by becoming a go-to store for consumers to test competitively priced electronics products. Expert advice from staff -- a service unavailable from competitor Amazon.com Inc. -- was key to winning back sales. 

Fernandez and other analysts aren’t optimistic Bed Bath & Beyond can forge a similar path, however. “They don’t have all the time in the world to execute this turnaround,” she said. 

While Best Buy focused on preserving cash to shore up its finances and improve operations, Bed Bath & Beyond has returned a lot of cash to shareholders in recent years. While that helped to boost the stock in the short term, it’s limiting the company’s flexibility today. The recent financing agreements alleviate some pressure, at least for now. 

Still, S&P Global Ratings on Thursday reduced Bed Bath & Beyond’s credit rating to CCC- from CCC, citing “very weak” prospects as well as “ongoing cash burn, unfavorable macroeconomic conditions and our view that vendor relationships could be strained.” That’s nine levels below investment grade, with entities at that level classified as vulnerable to nonpayment and dependent on favorable conditions to meet its commitments. 

Bed Bath & Beyond shares fell 7.1 per cent to US$8.86 at 1:48 p.m. on Thursday in New York trading, bringing its year-to-date decline to almost 40 per cent. 

The company “is arguably in this vicious cycle of challenged market share and inability to really invest in market-share stabilizing initiatives,” Fitch Ratings analyst David Silverman said. “These vicious cycles are pretty difficult to get out of.”

The new financing “only kicks the can down the road,” Raymond James analyst Bobby Griffin said in a research note, adding the current business trends “remain abysmal.” 

In a reversal of its strategy over the past couple of years, Bed Bath & Beyond is looking to decrease the amount of private-label products it sells. Former Chief Executive Officer Mark Tritton had boosted the company’s own brands from around 10 per cent of sales to an estimated 25 per cent at the end of last year. While private labels are typically more profitable for retailers, at Bed Bath & Beyond many products failed to resonate with shoppers who had come to the chain for name-brand goods. 

“The private-label strategy they tried to implement clearly failed,” Wedbush analyst Seth Basham said. Tritton exited this summer. Now, Basham says, executives are “reverting back to what they tried before” -- but with a slight twist. They’ve said they will increase their offering of well-known national brands while also aiming to bring in more innovative products that shoppers might have a hard time finding elsewhere at the same price -- a la Best Buy.

The problem, Basham said, is it might be too late. Comparable sales fell by about 25 per cent in the first quarter from a year earlier and executives warned they are likely to fall again by about the same amount in the current one.

“They have lost the interest of so many customers already,” Basham said, “I think it’s going to be tough to win them back.”