BBBY Bed Bath and Beyond Inc

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information contained or incorporated by reference in this prospectus supplement, including the information under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 26, 2022, “Risk Factors” in Part II, Item 1A of our Quarterly Reports on Form 10-Q for the quarterly periods ended August 27, 2022 and November 26, 2022, and Exhibit 99.1 to our Current Report on Form 8-K dated August 31, 2022, Exhibit 99.2 to our Current Report on Form 8-K dated October 18, 2022, Exhibit 99.3 to our Current Report on Form 8-K dated February 6, 2023 and Item 8.01 to our Current Report on Form 8-K dated February 7, 2023, before making an investment decision. The risks described below are not the only ones facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business or results of operations in the future. Any of the following risks could materially adversely affect our business, financial condition or results of operations. In such case, you may lose all or part of your original investment in the shares.

Risks Related to the Offering, our Business and Liquidity

We need the proceeds from the offering of securities covered by this prospectus supplement to pay our outstanding obligations under our Credit Facilities and to operate our business, and we expect that we will likely file for bankruptcy protection if the offering is not fully consummated.

On March 30, 2023, the Company entered into the Amendment, which waived certain events of default under the Credit Agreement related to negative and affirmative covenants, including relating to the occurrence of a Funding Failure (as defined in the Credit Agreement without giving effect to the Amendment). The Amendment also revised provisions relating to the Equity Commitment (as defined in the Credit Agreement) to reflect the sales agreement and the Committed Equity Financing, including (i) the requirement to receive minimum Specified Equity Proceeds (as defined in the Amended Credit Agreement) as of the last day of any Equity Proceeds Testing Period (as defined in the Amended Credit Agreement), (ii) the implementation of reserves in relation thereto, and (iii) the result of an event of default in connection with an Equity Termination Event (as defined in the Amended Credit Agreement), in each case, as more specifically contemplated therein.

Additionally, under the Amendment, (i) the total revolving commitment was decreased from $565 million to $300 million, (ii) the letter of credit sublimit under the revolving credit facility was reduced from $225 million to $175 million, (iii) the Interest Payment Date (as defined in the Amended Credit Agreement) with respect to both term loans and revolving loans has been revised, in each case, to reflect monthly interest payments, and (iv) the Company, its US and Canadian subsidiaries party thereto, the Administrative Agent and FILO Agent have agreed to negotiate in good faith to enter into a consignment agreement following the closing of the Amendment. The Amendment also includes certain other amendments, modifications or supplements to certain other terms and provisions as more specifically contemplated therein. Under the Amended Credit Agreement, the Company is required to repay any outstanding revolving loans under the revolving credit facility or to cash collateralize any outstanding letters of credit with any net cash proceeds received pursuant to certain of the Equity Documents and to submit a monthly budget (with the next budget being due on May 1, 2023 and on the first business day of each calendar month thereafter) which shall be reasonably acceptable to the Administrative Agent and the FILO Agent.

The Company presently owes approximately $101.5 million (excluding approximately $105.6 million in Letters of Credit) under our Credit Facilities and has approximately $11.5 million available to borrow. Without access to our revolving credit facility, we will not have the necessary cash resources for our operations and we may not have the cash resources available to repay accelerated obligations, refinance such indebtedness on commercially reasonable terms, or at all, or to collateralize our letters of credit, and lenders under our Amended Credit Agreement may exercise remedies against the collateral securing our obligations thereunder, all of which would have a material adverse effect on our business, financial condition, results of operations and liquidity. In such an event, we likely would be required to file for bankruptcy protection if the Company does not receive the proceeds from the offering covered by this prospectus supplement, the Company would not have the financial resources to satisfy its payment obligations under the Credit Facilities, and the Company expects that it will likely file for

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bankruptcy protection and that its assets will likely be liquidated. The Company has engaged advisors to explore strategic alternatives, including, if needed, filing for bankruptcy protection. Holders of our common stock would not receive any recovery at all in a bankruptcy scenario.

If the Company does not receive the proceeds from the offering of securities covered by this prospectus supplement, we expect that we will likely file for bankruptcy protection.

If the Company does not receive the proceeds from the offering of securities covered by this prospectus supplement, we expect that we will likely file for bankruptcy protection. The Company believes that present fair market value of the assets of the Company are less than the total amount required to pay the probable liabilities of the Company on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured. Subject to certain limitations in the sales agreement and compliance with applicable law, we have the discretion to deliver instruction to BRS to use its commercially reasonable efforts to sell shares of our common stock at any time throughout the term of the sales agreement, but BRS will be under no obligation to sell or purchase any securities under the sales agreement. The number of shares that are sold through BRS after our instruction will fluctuate based on a number of factors, including the market price of our common stock during the sales period, the limits we set with BRS in any instruction to sell shares, and the demand for our common stock during the sales period. Because the price per share of each share sold will fluctuate during this offering, it is not currently possible to predict the gross proceeds to be raised in connection with those sales. In addition, the sales agreement requires that the Company meet certain conditions at each time of sale, including that our common stock shall remain listed on a national securities exchange, that we have sufficient authorized common stock to issue the shares subject to such closing, that we have not filed for bankruptcy protection and that there is no default or event of default under our Credit Agreement or other obligations that would cause a material adverse effect. We may not satisfy the conditions in the sales agreement, and therefore we may not receive the potential proceeds from this offering. If we do not receive the proceeds from this offering, whether because we cannot satisfy the conditions in the sales agreement or otherwise, irrespective of our execution of our transformative plan, then we expect that we will likely file for bankruptcy protection, in which case holders of our common stock will likely receive no recovery at all for the securities offered hereby.

The issuance of the securities in this offering will significantly dilute the ownership interest of the existing holders of our common stock, and the market price of our common stock will likely decline significantly as a result of sales of such securities into the public market by investors and subsequent investors or the perception that such sales may occur.

Our existing holders of common stock will be significantly diluted by the issuance of the securities in this offering. Our public float will be significantly increased and the market price of our common stock could decline significantly as a result of subsequent sales of the shares of common stock issued in this offering, which could occur at any time, or the perception that such sales may occur.

Pursuant to this offering, assuming that we have sufficient authorized capital stock to issue such shares of common stock, a maximum of 379,746,835 shares of common stock may be issued, at an assumed offering price of $0.79, which was the last reported sale price of our common stock on Nasdaq on March 27, 2023. If all such shares are issued and resold by holders thereof, our total number of shares of common stock outstanding following such issuances and resales would be 88.7% of our total number of shares of common stock outstanding as of March 27, 2023 prior to such issuances, assuming that we have sufficient authorized capital stock to issue such shares of common stock.

In addition, the shares purchased by the investors in this offering, will be purchased at different prices, many of which could be at prices below the current and/or then trading prices of shares of our common stock or at prices below the price at which our existing shareholders purchased our common stock.

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Investors may experience future dilution as a result of future equity offerings, including the Committed Equity Facility.

In order to raise additional capital, we may at any time, including during the pendency of this offering, offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock at prices that may not be the same as the price per share in this offering. Pursuant to the Exchange Agreement, the Company exchanged the Preferred Stock Warrant to purchase 70,004 shares of Series A Convertible Preferred Stock for 10,000,000 shares of common stock and rights to receive 5,000,000 shares of common stock upon the receipt of shareholder approval of a proposal to effectuate a reverse stock split of the Company’s common stock to be presented to shareholders at a forthcoming special meeting of shareholders. In addition, we have entered into the Committed Equity Facility, pursuant to which the Company will have the right, but not the obligation, from time to time at the Company’s sole discretion over the 24-month period from and after the satisfaction of certain conditions, to direct BRP to purchase a specified amount of shares. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors in this offering.

Unless we receive shareholder approval to increase our authorized share capital or effectuate a reverse stock split, we may not have sufficient authorized share capital for issuing all of the shares of common stock subject to this offering or the Committed Equity Facility. The Company intends to effectuate a reverse stock split and is seeking to obtain shareholder approval at a special meeting of shareholders. If the reverse stock split is approved by the shareholders and the Company effectuates the reverse stock split, the total number of issued and outstanding shares of common stock would decrease based on the reverse stock split ratio. Because the number of authorized shares of our Common Stock will not be reduced proportionately, the reverse stock split will increase the ability of the Board of Directors (the “Board”) to issue authorized and unissued shares without further shareholder action. The issuance of shares of common stock would be dilutive to our existing shareholders and may also cause a decline in the trading price of our common stock. See “––Risks Related to the Offering, our Business and Liquidity––If we receive shareholder approval to effectuate a reverse stock split, investors may experience dilution and a decline in market price of the shares through the issuance of shares, but if we are unable to receive shareholder approval relating thereto, we expect that we will likely file for bankruptcy protection.”

A certain event of default has occurred under our Credit Agreement, as a result of which loans outstanding thereunder may be accelerated, among other things, and our lenders may exercise remedies against the collateral securing our obligations under the Credit Facilities in the event of acceleration.

Our obligations under the ABL Facility and the FILO Facility are secured by first priority liens on substantially all assets of the Company and certain of its subsidiaries, subject to customary exceptions. On March 30, 2023, the Company entered into the Amendment that waived certain events of default under the Credit Agreement related to negative and affirmative covenants, including relating to the occurrence of a Funding Failure (as defined in the Credit Agreement without giving effect to the Amendment). The Amendment also revised provisions relating to the Equity Commitment (as defined in the Credit Agreement) to reflect the sales agreement and the Committed Equity Financing, including (i) the requirement to receive minimum Specified Equity Proceeds (as defined in the Amended Credit Agreement) as of the last day of any Equity Proceeds Testing Period (as defined in the Amended Credit Agreement), (ii) the implementation of reserves in relation thereto, and (iii) the result of an event of default in connection with an Equity Termination Event (as defined in the Amended Credit Agreement), in each case, as more specifically contemplated therein.

Additionally, under the Amendment, (i) the total revolving commitment was decreased from $565 million to $300 million, (ii) the letter of credit sublimit under the revolving credit facility was reduced from $225 million to $175 million, (iii) the Interest Payment Date (as defined in the Amended Credit Agreement) with respect to both

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term loans and revolving loans has been revised, in each case, to reflect monthly interest payments, and (iv) the Company, its US and Canadian subsidiaries party thereto, the Administrative Agent and FILO Agent have agreed to negotiate in good faith to enter into a consignment agreement following the closing of the Amendment. The Amendment also includes certain other amendments, modifications or supplements to certain other terms and provisions as more specifically contemplated therein. Under the Amended Credit Agreement, the Company is required to repay any outstanding revolving loans under the revolving credit facility or to cash collateralize any outstanding letters of credit with any net cash proceeds received pursuant to certain of the Equity Documents and to submit a monthly budget (with the next budget being due on May 1, 2023 and on the first business day of each calendar month thereafter) which shall be reasonably acceptable to the Administrative Agent and the FILO Agent. Without access to our revolving credit facility, we will not have the necessary cash resources for our operations and we may not have the cash resources available to repay accelerated obligations, refinance such indebtedness on commercially reasonable terms, or at all, or cash to collateralize our letters of credit, and lenders under our Amended Credit Agreement may exercise remedies against the collateral securing our obligations thereunder, all of which would have a material adverse effect on our business, financial condition, results of operations and liquidity. If we do not receive the proceeds from this offering, then we expect that we will likely file for bankruptcy protection, in which case holders of our common stock will not receive any recovery.

Our borrowing capacity under our Credit Facilities depends on the value of our assets, and the full committed amount of our Credit Facilities may not be available to us.

Under the Amendment, (i) the total revolving commitment was decreased from $565 million to $300 million and (ii) the letter of credit sublimit under the revolving credit facility was reduced to $175 million. Our borrowing capacity under the ABL Facility varies according to the Company’s inventory levels and credit card receivables, net of certain reserves, and the FILO Facility is subject to a borrowing base consisting of eligible credit card receivables, eligible inventory and eligible intellectual property. In the event of any decrease in the amount of or appraised value of these assets or upon the disposition of assets or upon the receipt of equity proceeds, our borrowing capacity under either the ABL Facility or the FILO Facility, would similarly decrease, which could adversely impact our business and liquidity. We have announced the closure of approximately 150 lower-producing Bed Bath & Beyond banner stores. As the closures are completed and in the event or future closures, we expect our borrowing capacity under both the ABL Facility and FILO Facility will decrease to the extent sales and cash flow levels decrease following such store closures. The ABL Facility and FILO Facility contain customary affirmative and negative covenants and certain restrictions on operations become applicable if our availability falls below certain thresholds. These covenants could impose significant operating and financial limitations and restrictions on us, including restrictions on our ability to enter into particular transactions such as asset sales and acquisitions, and to engage in other actions that we may believe are advisable or necessary for our business.

Trading in our securities is highly speculative, and we may be required to file for bankruptcy protection even if the offering of securities covered by this prospectus supplement are fully consummated.

Trading in our securities is highly speculative and poses substantial risks to investors. Trading prices for our securities may bear little or no relationship to the actual recovery, if any, by holders of our common stock in any bankruptcy proceeding and the holders of our common stock will not receive any recovery at all in a bankruptcy scenario. Our operations and ability to develop and execute our business plan, our financial condition, our liquidity and our continuation as a going concern, are subject to risks and uncertainties. These risks include the following:

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These risks and uncertainties could affect our business and operations in various ways. If some of these risks materialize, we may not have sufficient resources to continue to operate our business and we may be required to file for bankruptcy even if the offering of securities covered by this prospectus supplement is consummated. Holders of our common stock will not receive any recovery at all in a bankruptcy scenario.

If we receive shareholder approval to effectuate a reverse stock split, investors may experience dilution and a decline in market price of the shares through the issuance of shares, but if we are unable to receive shareholder approval relating thereto, we expect that we will likely file for bankruptcy protection.

Unless we receive shareholder approval to increase our authorized share capital or effectuate a reverse stock split, we may not have sufficient authorized share capital for issuing all of the shares of common stock subject to this offering. The Company intends to effectuate a reverse stock split and is seeking to obtain shareholder approval at a special meeting of shareholders. The Company filed a preliminary proxy statement with the SEC on March 17, 2023 in connection with the special meeting. A majority of the outstanding shares of the Company’s common stock entitled to vote at the special meeting must vote in favor of the proposal in order for it to be approved. If the reverse stock split is approved by the shareholders and the Company effectuates the reverse stock split, the total number of issued and outstanding shares of Common Stock would decrease based on the final ratio.

Currently, we are authorized in our Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to issue up to a total of 900,000,000 shares of common stock. The total number of authorized shares of common stock will not change as a result of the reverse stock split. As of March 27, 2023, we had 428,098,624 shares outstanding and 295,411,477 shares available for future issuance. The reverse stock split would have the effect of reducing the number of outstanding shares of common stock, the number of shares of common stock held in treasury and the number of shares of common stock reserved for issuance pursuant to our stock plans and warrants. Therefore, because the total number of authorized shares of common stock will not change as a result of the reverse stock split, upon the effectiveness of the reverse stock split, the number of authorized shares of common stock that are not issued and outstanding or reserved for issuance would increase. All authorized but unissued shares that are not reserved for issuance would remain available for issuance by the Board for general corporate purposes and issuances pursuant to the sales agreement and CEF, at any time, at its discretion, without shareholder approval. If the Board were to authorize the issuance of any such shares, such issuances could dilute the ownership interests of holders of common stock and may also cause a decline in the trading price of our common stock.

However, if we do not receive shareholder approval to effectuate the reverse stock split, we may not have sufficient authorized share capital for issuing the shares of common stock subject to this offering and we will not be able to receive the proceeds from this offering. Additionally, we will not have sufficient authorized share capital for issuing shares of common stock subject to the CEF and we will not be able to receive the proceeds from that financing. In such case, we expect that we will likely file for bankruptcy protection, in which case holders of our common stock will not receive any recovery.

Even if the offering of securities covered by this prospectus supplement is fully consummated, we may not be successful in implementing our transformative plan, including building back our inventory and increasing customer sales, and we have historically underperformed in implementing management plans, which may force us to seek additional strategic alternatives in the future.

We expect to use the net proceeds from this offering to repay outstanding revolving loans under the ABL Facility. Outstanding revolving loans repaid using net proceeds from the offering may be reborrowed subject to

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availability under the ABL Facility, and we expect to use those borrowings for general corporate purposes, including, but not limited to, rebalancing the Company’s assortment and building back the Company’s inventory. As previously disclosed, we are undertaking a number of actions to support our ongoing transformation, including but not limited to, cost cutting, lowering capital expenditures and reducing our store footprint, including related distribution centers which are expected to result in our digital channel becoming a higher proportion of our sales. We will continue to seek reductions in rental obligations with landlords in our determination of the appropriate footprint. The timely achievement of our transformative plan as well as our ability to maintain an adequate level of liquidity are subject to various risks, some of which are outside of our control. In particular, our ability to build back inventory is critical to the success of our transformative plan and our vendors may not cooperate and effectively allow us to build back inventory at a scale needed for us to successfully operate our business. We have failed to timely make payments due to our vendors, landlords and similar other business partners, which has affected our relationship with such parties and our reputation and may affect our ability to successfully engage with such parties and other business partners in the future. Further, our ability to achieve expected results depends on our ability to attract customers to our sales channels and increase customer sales. Our ability to attract customers and increase customer sales largely depends on various factors, including our ability to provide customers with an attractive assortment of merchandise. If we are unable to maintain our relationships with our merchandise suppliers, we will not be able to provide the necessary assortment of merchandise that will enable us to attract customers to our sales channels or increase sales. Our efforts to attract customers and to increase customer sales may be further challenged by current economic conditions, including an inflationary environment and increasing interest rates which may affect customers’ willingness and ability to spend.

We do not expect the proceeds from this offering will be adequate to fully implement our transformative plan and repay our borrowings under the Credit Facilities. For this reason, we have concurrently entered into the Committed Equity Facility with BRP, whereby the Company will have the right, but not the obligation, from time to time at the Company’s sole discretion over the 24-month period from and after the satisfaction of certain conditions, to direct the BRP to purchase a specified amount of shares. In the event that we fail to obtain all of the anticipated proceeds under the Committed Equity Facility as a result of the applicability of the Exchange Cap (as defined in the Committed Equity Facility), which prevents us from issuing more than 20% of the Company’s issued and outstanding shares below certain prices, we expect that we will likely file for bankruptcy protection. We will continue to explore strategic alternatives in the future to the extent necessary to implement our transformative plan.

Unless we receive shareholder approval to increase our authorized share capital or effectuate a reverse stock split, we may not have sufficient authorized share capital for issuing all of the shares of common stock subject to this offering or the Committed Equity Facility. If we are unable to issue all of the shares of common stock subject to this offering and the Committed Equity Facility, we expect that we will likely file for bankruptcy protection. The Company intends to effectuate a reverse stock split and is seeking to obtain shareholder approval at a special meeting of shareholders. If the reverse stock split is approved by the shareholders and the Company effectuates the reverse stock split, the total number of issued and outstanding shares of common stock would decrease based on the reverse stock split ratio. Because the number of authorized shares of our common stock will not be reduced proportionately, the reverse stock split will increase the Board’s ability to issue authorized and unissued shares without further shareholder action. The issuance of shares of common stock would be dilutive to our existing shareholders and may also cause a decline in the trading price of our common stock.

We have historically underperformed in implementing management plans, including our transformative plan. For example, after launching a turnaround plan in the second and the third quarters of fiscal year 2022, we were not able to achieve our anticipated 2022 holiday results, largely due to our inability to supply our various sales channels with the appropriate level of merchandise and decrease in traffic trends. If we are not successful in implementing our transformative plan, our business, financial condition and results of operations may adversely be affected, which may force us to consider additional strategic alternatives, including restructuring or refinancing our debt, seeking additional debt or equity capital, reducing or delaying our business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including filing for

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bankruptcy protection. We may not be able to successfully execute any strategic alternatives we are currently considering or any other options, and our ability to do so could be adversely affected by numerous factors, including changes in the economic or business environment, financial market volatility and the performance of our business.

Nasdaq may delist our common stock from quotation on its exchange, which could limit investors’ ability to sell and purchase our securities and subject us to additional trading restrictions.

Our common stock is currently listed on the Nasdaq Global Select Market under the trading symbol “BBBY.” Our share price has dropped below $1.00 since March 20, 2023. If our share price continues to stay below the minimum of $1.00 for a period of 30 consecutive business days, our common stock may be suspended and/or delisted for failure to meet the requirement for continued inclusion on Nasdaq under Nasdaq Listing Rule 5550(a)(2). If our common stock is not listed on Nasdaq at any time after this offering, we could face significant material adverse consequences, including:

One of the condition precedents to the sale of securities in this offering is that our shares of common stock is listed on an exchange. If our shares of common stock are delisted from Nasdaq, then we will not meet the conditions to being able to sell shares pursuant to this offering. If we do not receive the proceeds from this offering, whether because we cannot satisfy the conditions precedent or otherwise, then we expect that we will likely file for bankruptcy protection, in which case you will receive no recovery at all for your shares.

Our recurring losses and negative cash flow from operations, as well as current cash and liquidity projections, raise substantial doubt about our ability to continue as a going concern.

Based on recurring losses from operations and negative cash flows from operations for the nine months ended November 26, 2022 as well as current cash and liquidity projections, we have concluded that there is substantial doubt about our ability to continue as a going concern for the next twelve months. Our consolidated financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result if we do not continue as a going concern. You should not rely on our consolidated balance sheet as an indication of the amount of proceeds that would be available to satisfy claims of creditors, and potentially be available for distribution to holders of our common stock, in the event of liquidation.

We have experienced significant turnover in our senior management team and across our organization, and our failure to attract and retain qualified personnel, skilled workers and key officers could have an adverse effect on us.

We have recently experienced significant turnover in our senior management team and reductions in our workforce and have promoted employees to fill certain key roles and are conducting searches for additional key roles, including a permanent chief financial officer. Our ability to retain key employees in the long-term is affected by our financial situation, our business performance and our ability to successfully implement our transformative plan. Our business may be adversely affected by the transitions in our senior management team

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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, internal controls and our ability to fully implement our business plan and growth strategy. 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. Competition for key management personnel is intense. If we fail to successfully attract and appoint permanent replacements with the appropriate expertise, we could experience increased employee turnover and harm to our business, results of operations, cash flow and financial condition. The search for permanent replacements could also result in significant recruiting and relocation costs, as well as increased salary and benefit costs. Like most businesses, our employees are important to our success and we are dependent in part on our ability to retain the services of our key management, operational, compliance, finance, administrative and store associate personnel. In order to compete and implement our growth strategy, we must attract, retain, and motivate employees, and turnover of senior management, store closures and reductions in workforce may make it difficult to retain qualified and skilled employees.

Risks Related to the Offering and Our Common Stock

The market prices and trading volume of our shares of common stock have recently experienced, and may continue to experience, extreme volatility, which could cause purchasers of our common stock to incur substantial losses.

The market prices and trading volume of our shares of common stock have recently experienced, and may continue to experience, extreme volatility, which could cause purchasers of our common stock to incur substantial losses. From January 3, 2022 to March 27, 2023, the market price of our common stock has had extreme fluctuations, ranging from an intra-day low of $0.77 per share on March 20, 2023 to an intra-day high of $30.06 on March 7, 2022, and the last reported sale price of our common stock on Nasdaq on March 27, 2023, was $0.79 per share. From January 3, 2022 to March 27, 2023, according to Nasdaq, daily trading volume of our common stock ranged from as low as approximately 2,121,088 to as high as approximately 395,319,906 shares.

We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last. In addition, we do not record or have access to information regarding any share lending or short selling transactions other than what is publicly available from third-party providers. We do not have reliable information about synthetic shares and fake shares and only maintain records regarding shares that we have legally issued and are outstanding. We also understand that there has been considerable trading in derivatives on the Company’s shares including both put and call options. These derivative securities can have the effect of increasing the volatility of our share price. Under the circumstances, we caution you against investing in our common stock, unless you are prepared to incur the risk of incurring substantial losses.

Extreme fluctuations in the market price of our common stock have been accompanied by reports of strong and atypical retail investor interest, including on social media and online forums. The market volatility and trading patterns we have experienced create several risks for investors, including the following:

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We may continue to incur rapid and substantial increases or decreases in our stock price in the foreseeable future that may not coincide in timing with the disclosure of news or developments by or affecting us. Accordingly, the market price of our shares of common stock may fluctuate dramatically and may decline rapidly, regardless of any developments in our business. Overall, there are various factors, many of which are beyond our control, that could negatively affect the market price of our common stock or result in fluctuations in the price or trading volume of our common stock, including:

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In addition, in the past, shareholders have instituted securities class action litigation following periods of market volatility. If we are involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.

Future issuances of equity or debt securities by us may adversely affect the market price of our common stock and we may not have sufficient authorized share capital for issuing all of the shares of common stock subject to this offering.

Our authorized share capital consists of 900.0 million shares of our common stock. As of March 27, 2023, we had 428,098,624 shares outstanding and 295,411,477 shares available for future issuance. We may issue, or move out of treasury, as applicable, all of these shares of common stock without any action or approval by our shareholders, subject to certain exceptions. Pursuant to the offering of the common stock covered by this prospectus supplement, assuming that we have sufficient authorized capital stock to issue such shares of common stock, a maximum of 379,746,835 shares of common stock may be issued, at an assumed offering price of $0.79 per share, which was the last reported sale price of our common stock on Nasdaq on March 27, 2023. If all such shares are issued and resold by holders thereof, our total number of shares of common stock outstanding following such issuances and resales would be 88.7% of our total number of shares of common stock outstanding as of March 27, 2023 prior to such issuances, assuming that we have sufficient authorized capital stock to issue such shares of common stock.

Unless we receive shareholder approval to increase our authorized share capital or effectuate a reverse stock split, we may not have sufficient authorized share capital for issuing all of the shares of common stock subject to this offering. Based on the future price of our common stock, if we do not receive the proceeds from the offering of securities covered by this prospectus supplement, irrespective of our execution of our transformative plan, then we expect that we will likely file for bankruptcy protection, in which case holders of our common stock will likely receive no recovery at all for common stock that they own. See “Risk Factors––Risks Related to the Offering, our Business and Liquidity—If the Company does not receive the proceeds from the offering of securities covered by this prospectus supplement, we expect that we will likely file for bankruptcy protection” and “––Risks Related to the Offering, our Business and Liquidity—If we receive shareholder approval to effectuate a reverse stock split, investors may experience dilution and a decline in market price of the shares through the issuance of shares, but if we are unable to receive shareholder approval relating thereto, we expect that we will likely file for bankruptcy protection.”

In the event that we fail to obtain all of the anticipated proceeds under the CEF as a result of the applicability of the Exchange Cap (as defined in the CEF) preventing us from issuing more than 20% of the company’s issued and outstanding shares below certain prices, we expect that we will likely file for bankruptcy protection.

In the future, we may attempt to obtain financing or to increase further our capital resources, or refinance existing obligations, by issuing additional shares of our common stock or offering debt or other equity securities, including commercial paper, medium-term notes, senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. Future acquisitions could require substantial additional capital in excess of

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cash from operations. There can be no guarantee that these offers to exchange will be successful. In addition, we also expect to issue additional shares in connection with the exercise of our stock options under our incentive plans.

Issuing additional shares of our common stock or other equity securities or securities convertible into equity for financing or in connection with our incentive plans, acquisitions or otherwise may dilute the economic and voting rights of our existing shareholders or reduce the market price of our common stock or both. Upon liquidation, holders of our debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our common stock. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings. Thus, holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their stockholdings in us. See “Description of Securities” in the accompanying prospectus.

A “short squeeze” due to a sudden increase in demand for shares of our common stock that largely exceeds supply and/or focused investor trading in anticipation of a potential short squeeze have led to, may be currently leading to, and could again lead to, extreme price volatility in shares of our common stock.

Investors may purchase shares of our common stock to hedge existing exposure or to speculate on the price of our common stock. Speculation on the price of our common stock may involve long and short exposures. To the extent aggregate short exposure exceeds the number of shares of our common stock available for purchase on the open market, investors with short exposure may have to pay a premium to repurchase shares of our common stock for delivery to lenders of our common stock. Those repurchases may, in turn, dramatically increase the price of shares of our common stock until additional shares of our common stock are available for trading or borrowing. This is often referred to as a “short squeeze.” A large proportion of our common stock has been in the past and may be traded in the future by short sellers, which may increase the likelihood that our common stock will be the target of a short squeeze, and there is widespread speculation that our current trading price is the result of a short squeeze. A short squeeze and/or focused investor trading in anticipation of a short squeeze have led to, may be currently leading to, and could again lead to volatile price movements in shares of our common stock that may be unrelated or disproportionate to our operating performance or prospects and, once investors purchase the shares of our common stock necessary to cover their short positions, or if investors no longer believe a short squeeze is viable, the price of our common stock may rapidly decline.

In addition, we do not record or have access to information regarding any share lending or short selling transactions other than what is publicly available from third-party providers. We do not have reliable information about synthetic shares and fake shares and only maintain records regarding shares that we have legally issued and are outstanding. We also understand that there has been considerable trading in derivatives on the Company’s shares including both put and call options. These derivative securities can have the effect of increasing the volatility of our share price.

Investors that purchase shares of our common stock during a short squeeze may lose a significant portion of their investment. Under the circumstances, we caution you against investing in our common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.

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Information available in public media that is published by third parties, including blogs, articles, online forums, message boards and social and other media may include statements not attributable to the Company and may not be reliable or accurate.

We have received, and may continue to receive, a high degree of media coverage that is published or otherwise disseminated by third parties, including blogs, articles, online forums, message boards and social and other media. This includes coverage that is not attributable to statements made by our directors, officers or employees. You should read carefully, evaluate and rely only on the information contained in this prospectus supplement, the accompanying prospectus or any applicable free writing prospectus or incorporated documents filed with the SEC in determining whether to purchase our shares of common stock. Information provided by third parties may not be reliable or accurate and could materially impact the trading price of our common stock which could cause losses to your investments.

The actual number of shares we will issue under the sales agreement, at any one time or in total, is uncertain.

Subject to certain limitations in the sales agreement and compliance with applicable law, as well as our ability to have sufficient authorized capital stock to issue such shares, we have the discretion to deliver instruction to BRS to sell shares of our common stock at any time throughout the term of the sales agreement. The number of shares that are sold through BRS after our instruction will fluctuate based on a number of factors, including the market price of our common stock during the sales period, the limits we set with BRS in any instruction to sell shares, and the demand for our common stock during the sales period. Because the price per share of each share sold will fluctuate during this offering, it is not currently possible to predict the gross proceeds to be raised in connection with those sales.

The common stock offered hereby may be sold in “at the market offerings,” and investors who buy shares at different times will likely pay different prices.

Investors who purchase shares in this offering at different times will likely pay different prices, and accordingly may experience different levels of dilution and different outcomes in their investment results. We will have discretion, subject to market demand, to vary the timing, prices and number of shares sold in this offering. In addition, subject to the final determination by our Board or any restrictions we may place in any applicable placement notice delivered to the agent, there is no minimum or maximum sales price for shares to be sold in this offering. Investors may experience a decline in the value of the shares they purchase in this offering as a result of sales made at prices lower than the prices they paid.

The market price of our common stock could decline due to the large number of outstanding shares of our common stock available for future sale.

Following this offering, we will not be able to issue additional shares of common stock or securities linked to our common stock unless we receive shareholder approval to increase our authorized share capital or effectuate a reverse stock split. If we receive such approval, then sales of substantial amounts of our common stock in the public market in future offerings or the perception that these sales could occur, could cause the market price of our common stock to decline. These sales could also make it more difficult for us to sell equity or equity-related securities in the future, at a time and price that we deem appropriate. In addition, the additional sale of our common stock by our officers or directors in the public market or the perception that these sales may occur, could cause the market price of our common stock to decline.

Further, resales by the investors of the securities offered hereby could have a significant impact on the market price of our common stock. Pursuant to this offering, assuming that we have sufficient authorized capital stock to issue such shares of common stock, a maximum of 379,746,835 shares of common stock may be issued, at an assumed offering price of $0.79, which was the last reported sale price of our common stock on Nasdaq on March 27, 2023. If all such shares are issued and resold by holders thereof, our total number of shares of common stock outstanding following such issuances and resales would be 88.7% of our total number of shares of

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common stock outstanding as of March 27, 2023 prior to such issuances, assuming that we have sufficient authorized capital stock to issue such shares of common stock. See “—The issuance of the securities in this offering will significantly dilute the ownership interest of the existing holders of our common stock, and the market price of our common stock will likely decline significantly as a result of sales of such securities into the public market by investors and subsequent investors or the perception that such sales may occur.”

We may issue shares of our common stock or other securities from time to time as consideration for, or to finance, future acquisitions, investments, debt-for-equity exchanges or for other capital needs. We cannot predict the size of future issuances of our shares or the effect, if any, that future sales and issuances of shares would have on the market price of our common stock. If any such acquisition or investment is significant, the number of shares of common stock or the number or aggregate principal amount, as the case may be, of other securities that we may issue may in turn be substantial and may result in additional dilution to our shareholders. We may also grant registration rights covering shares of our common stock or other securities that we may issue in connection with any such acquisitions and investments.

Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price of our common stock.

Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur as a result of our sales agreement and the Committed Equity Facility or otherwise could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock or the market perception that we are permitted to sell a significant number of our securities would have on the market price of our common stock.

Certain provisions of our Certificate of Incorporation, our by-laws and New York law could hinder, delay or prevent a change in control of us that you might consider favorable, which could also adversely affect the price of our common stock.

Certain provisions under our Certificate of Incorporation, our Amended and Restated By-laws (the “By-laws”) and New York law could discourage, delay or prevent a transaction involving a change in control of our Company, even if doing so would benefit our shareholders. These provisions include:

Anti-takeover provisions could substantially impede the ability of a public shareholder to benefit from a change in control or change of our management and Board and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium. These provisions could also

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discourage proxy contests and make it more difficult for you and other shareholders to elect directors of your choosing and to cause us to take other corporate actions you desire. Because our Board is responsible for appointing the members of our management team, these provisions could in turn affect any attempt to replace current members of our management team. As a result, efforts by shareholders to change the direction or management of the Company may be unsuccessful. See “Description of Securities” in the accompanying prospectus for additional information regarding the provisions included in our Certificate of Incorporation and our By-laws.

Our management team may invest or spend the proceeds of this offering in ways with which you may not agree or in ways which may not yield a significant return.

Our management will have broad discretion over the use of any proceeds from reborrowings. We intend to use the proceeds from this offering to repay outstanding revolving loans under the ABL Facility in accordance with the Amendment. Under the Amendment, we will be required to apply all net cash proceeds received from the issuance and sale of the securities in this offering to repay outstanding revolving loans under the ABL Facility or to cash collateralize any outstanding letters of credit. Outstanding revolving loans repaid using net proceeds of the offering may be reborrowed, subject to availability under the ABL Facility, and we expect to use those borrowings for general corporate purposes, including, but not limited to, rebalancing our assortment and building back our inventory. See “Use of Proceeds” on page S-13 of this prospectus supplement. Our management will have considerable discretion in the application of the reborrowings, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not increase our operating results or enhance the value of our common stock.

If our common stock becomes subject to the penny stock rules, it would become more difficult to trade our shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on The Nasdaq Global Select Market, and if the price of our common stock is less than $5.00, our common stock will be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, (ii) a written agreement to transactions involving penny stocks and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore shareholders may have difficulty selling their shares.

Our preliminary financial estimates represent management’s current estimates and are subject to change.

The preliminary estimated financial information contained in “Prospectus Supplement Summary — Recent Developments — Preliminary Results for Fiscal 2022 Fourth Quarter” represents only preliminary estimates and is based on information available to management as of the date of this prospectus supplement and these estimates could change. Our actual financial results as of and for the three months and year ended February 25, 2023 are subject to the completion of our financial closing processes, any adjustments that may result from the completion of such processes, and the finalization of our actual financial statements. Such actual financial results may not be available until after this offering is completed and, consequently, may not be available to you prior to investing in this offering. Our actual financial results as of and for the three months and year ended February 25, 2023 may

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differ materially from the preliminary estimated financial information we have provided as a result of completion of our final adjustments, review by our independent registered public accountants and other developments arising between now and the time that our financial results for such period are finalized. KPMG LLP has not audited, reviewed, compiled or performed any procedures with respect to such preliminary estimated financial information as of and for the three months and the year ended February 25, 2023. Accordingly, KPMG LLP does not express an opinion or any other form of assurance with respect to these preliminary estimated amounts. Complete results as of and for the year ended February 25, 2023 will be included in our Annual Report on Form 10-K, which is due by April 26, 2023. See the other risks described in this section and “Cautionary Note Regarding Forward-Looking Statements” for additional information regarding factors that could result in differences between these preliminary estimated financial results and the actual financial results we will report.

Our preliminary financial estimates represent management’s current estimates and are subject to change.

The preliminary estimated financial information contained in “Prospectus Supplement Summary — Recent Developments — Preliminary Estimated Financial Information for Fourth Quarter and Full Year 2022” represents only preliminary estimates and is based on information available to management as of the date of this prospectus supplement and these estimates could change. Our actual financial results as of and for the three months and year ended February 25, 2023 are subject to the completion of our financial closing processes, any adjustments that may result from the completion of such processes, and the finalization of our actual financial statements. Such actual financial results may not be available until after this offering is completed and, consequently, may not be available to you prior to investing in this offering. Our actual financial results as of and for the three months and year ended February 25, 2023 may differ materially from the preliminary estimated financial information we have provided as a result of completion of our final adjustments, review by our independent registered public accountants and other developments arising between now and the time that our financial results for such period are finalized. KPMG LLP has not audited, reviewed, compiled or performed any procedures with respect to such preliminary estimated financial information as of and for the three months and the year ended February 25, 2023. Accordingly, KPMG LLP does not express an opinion or any other form of assurance with respect to these preliminary estimated amounts. Complete results as of and for the year ended February 25, 2023 will be included in our Annual Report on Form 10-K, which is due by April 26, 2023. See the other risks described in this section and “Cautionary Note Regarding Forward-Looking Statements” for additional information regarding factors that could result in differences between these preliminary estimated financial results and the actual financial results we will report.

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RISK FACTORS

Investing in the offered securities involves risks. Before deciding to invest in our securities, you should carefully consider the discussion of risks and uncertainties under the heading “Risk Factors” contained in any applicable prospectus supplement and in the documents that are incorporated by reference in this prospectus. See the section entitled “Where You Can Find More Information, Incorporation by Reference” in this prospectus.

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