Bed Bath & Beyond – one of the original chain stores known for its seemingly endless supply of sheets, towels and kitchen gadgets – has filed for bankruptcy protection after years of dismal sales and losses and numerous failed turnaround plans.
The beleaguered home goods chain filed the filing in New Jersey’s United States District Court on Sunday, saying it will begin an orderly winding down of its operations as it seeks a buyer for all or some of its businesses. In its bankruptcy filing, the retailer said it expects to close all of its stores by June 30.
For now, the 360 Bed Bath & Beyond stores and the 120 Buy Buy Baby sites and the company’s websites will remain open to serve customers.
It listed estimated assets and liabilities in the $1 billion to $10 billion range. The move comes after the company failed to raise funds to stay afloat.
In a statement, the Union, New Jersey-based company said it was voluntarily applying “to conduct an orderly wind-down of its business while conducting a limited marketing process to generate interest in one or more sales of part or all of its assets.”
Thousands of jobs are at risk due to the closure of shops. According to the court, the company had 14,000 employees. That is drastically lower than the 32,000 in February 2022.
Bed Bath & Beyond said it has secured a commitment of approximately $240 million in financing from Sixth Street Specialty Lending, Inc so it can continue to operate through the bankruptcy process.
“It is the death of an icon. A lot of people grew up with it,” said Neil Saunders, CEO of GlobalData Retail. “It’s a retail institution, but unfortunately an institution doesn’t protect you from financial hardship.”
Weak sales, disastrous strategy
Founded in 1971, Bed Bath & Beyond had enjoyed its status for many years as a chain retailer that offered a vast selection of sheets, towels, and gadgets unmatched by department store rivals. It was one of the first to introduce shoppers to many of today’s household items, such as the air fryer or single-use coffee maker, and its 15 to 20 percent coupons were ubiquitous.
But for the past decade, Bed Bath & Beyond has struggled with weak sales, largely because of its cluttered assortments and lagging online strategy that made it difficult to compete with Target and Walmart, both of which have spruced up their home departments. with higher quality sheets and bedding. Meanwhile, online players such as Wayfair have enticed customers with affordable and trendy furniture and home accessories.
In late 2019, Bed Bath & Beyond enlisted Target manager Mark Tritton to take over and turn the sale around. Tritton quickly reduced coupons and began introducing store label brands at the expense of national labels, a strategy that proved disastrous for the retailer.
And the coronavirus pandemic, which occurred shortly after his arrival, forced the retailer to temporarily close its stores. It was never able to use the health crisis to develop a successful online strategy as others had, analysts said. And while many retailers struggled with supply chain issues a year ago, Bed Bath & Beyond was among the most vulnerable, as many of its top 200 best-selling items, including kitchen appliances and personal electronics, went missing during the 2021 holiday season.
The retailer ousted Tritton in June 2022 after two consecutive quarters of disastrous sales. In recent months, led by recently appointed president and CEO Sue Grove, the company reverted to its original strategy of focusing on national brands, rather than pushing its own store labels. But the company has had a hard time getting suppliers to supply goods because of the retailer’s financial problems.
This past holiday season, the stores missed many key items and the company lost many customers, a problem that continued to plague the retailer during the winter and spring seasons.
Share tank
The bankruptcy filing comes as the company’s stock has fallen even more as speculation about an impending bankruptcy filing increased. Financial performance has also deteriorated. At the end of March, it noted preliminary results showed a 40 to 50 percent drop in sales in stores open at least a year for the quarter ended Feb. 25.
The company also said in a filing with the Securities and Exchange Commission in late March that it planned to sell $300 million worth of stock to avoid filing for bankruptcy.
The retailer of household goods has warned several times since the beginning of this year of a possible bankruptcy. In late January, it noted in a government filing that it was in default on its loans and didn’t have the money to pay back what it owed. The company had said the default is forcing it to look at several alternatives, including restructuring its debt in bankruptcy court.
Bed Bath & Beyond joins a growing list of retailers that have filed for bankruptcy so far this year, including party supply chain Party City and David’s Bridal. Given the changing landscape and growing challenges in the US economy, the bankruptcy could provide a preview of what’s to come in the retail industry.
During the depths of the pandemic, a number of retailers have filed for Chapter 11 bankruptcy, including Neiman Marcus and JCPenney. But in 2022, there was a break in retail bankruptcy filings as shoppers, lavishly inundated with government stimulus money and a slew of savings, splurged, helping all types of retailers. But as lending tightens and inflation remains persistent, customers have tightened their wallets in recent months, leaving struggling retailers like Bed Bath & Beyond more vulnerable.
Bed Bath & Beyond had been trying to turn its business around and cut costs after previous management’s new strategies exacerbated a sales slump. The company announced last August that it would close about 150 of its namesake stores and cut its workforce by 20 percent. It also raised more than $500 million in new funding.
Shares of Bed Bath & Beyond, which traded at distressed levels, were also turbulent. They made a monstrous run from $5.77 to $23.08 in just over two weeks in August. The trading was reminiscent of last year’s meme stock craze, when out-of-favor companies suddenly became darlings of investors with smaller pockets.
But the stock fell to earth after Ryan Cohen — the billionaire co-founder of online pet products retailer Chewy Inc, who bought a nearly 10 percent stake in Bed Bath & Beyond last March — sold all of his shares.
Shares have hovered around 30 cents in recent days. A year ago, the shares were trading around $17.
Bed Bath & Beyond expects to process returns and exchanges through May 24 in accordance with its usual policies for items purchased before Sunday. It also expects gift cards, gift cards and loyalty certificates to be accepted through May 8. It will stop accepting coupons on Wednesday, April 26.