Bed Bath & Beyond, one of the original mega-retailers known for its seemingly endless linen, towels and kitchenware offerings, is now on the mend after years of dismal sales and losses and countless failed turnaround plans. Has filed for bankruptcy protection.
The embattled home goods chain filed in U.S. District Court in New Jersey on Sunday and said it will begin an orderly wind-down of its operations while it seeks a buyer for all or part of its business. In the bankruptcy filing, the retailer said it expected to close all of its stores by June 30.
For now, the company’s 360 Bed Bath & Beyond stores and 120 Buy Buy Baby locations and their websites will remain open to serve customers.
It lists estimated assets and liabilities between $1 billion and $10 billion. The move comes after the company failed to secure funding to stay afloat.
The Union City, New Jersey-based company said in a statement that it voluntarily submitted the application “to orderly wind down its operations while conducting a limited marketing process to solicit one or more sales of some or all of its operations.” assets of interest.”
Store closures will put thousands of jobs at risk. The company employs 14,000 workers, according to court documents. This is a sharp drop from 32,000 in February 2022.
Bed Bath & Beyond said it secured about $240 million in financing commitments from Sixth Street Specialty Lending, Inc to enable it to continue operating through bankruptcy proceedings.
“It’s the death of an icon. A lot of people grew up with it,” said Neil Saunders, managing director of GlobalData Retail. “It’s a retail establishment, but unfortunately, being an establishment doesn’t protect you from financial distress.”
Weak sales, disastrous strategy
Founded in 1971, Bed Bath & Beyond has enjoyed the status of a mass retailer for many years, offering an assortment of sheets, towels and knick-knacks unmatched by its department store competitors. It was one of the first to introduce shoppers to today’s household items like air fryers or single-serve coffee makers, and its 15% to 20% off coupons are ubiquitous.
But Bed Bath & Beyond’s sales have languished over the past decade or so, largely because its cluttered assortment and lagging online strategy have made it hard for it to compete with the likes of Target and Walmart, both of which are wary of their own businesses. The home department was overhauled with higher quality linens and bedding. Meanwhile, online players like Wayfair have lured customers with affordable and stylish furniture and home decor.
In late 2019, Bed Bath & Beyond tapped Target executive Mark Tritton to take the helm and turn around sales. Tritton quickly cut back on coupons and began rolling out store label brands at the expense of national labels, a strategy that proved disastrous for the retailer.
The coronavirus pandemic, which occurred shortly after his arrival, forced the retailer to temporarily close its stores. It has never been able to use the health crisis to pivot to a successful online strategy like others, analysts said. A year ago, while many retailers were grappling with supply chain issues, Bed Bath & Beyond was the most vulnerable, missing many of its 200 best-selling items during the 2021 holiday season, including kitchen appliances and personal electronics.
The retailer ousted Tritton in June 2022 after two consecutive quarters of disastrous sales. In recent months, under recently appointed president and CEO Sue Grove, the company has reverted to its original strategy of focusing on national brands rather than launching its own store labels. But because of the retailer’s financial struggles, the company has struggled to get suppliers to commit to delivering merchandise.
Stores were missing many key items this past holiday season, and the company lost customers, a problem that continued to plague the retailer throughout the winter and spring.
stake tank
The bankruptcy filing comes as the company’s shares fell even more as speculation grew about an imminent bankruptcy filing. Its financial performance has also deteriorated. In late March, the company noted that preliminary results showed a 40% to 50% decline in sales at 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 home furnishings retailer has repeatedly warned of possible bankruptcy since the start of the year. In late January, it said in a government filing that it defaulted on its loans and did not have the funds to pay back what it owes. The company has said the default has forced it to consider various alternatives, including restructuring debt in bankruptcy court.
Bed Bath & Beyond joins a growing list of retailers filing for bankruptcy so far this year, including party supply chain Party City and David’s Bridal. Given the changing landscape and mounting challenges in the U.S. economy, the bankruptcy could provide a window into the retail sector.
At the height of the pandemic, many retailers, including Neiman Marcus and JCPenney, filed for Chapter 11 bankruptcy protection. But in 2022, as shoppers flush with government stimulus money and pockets of savings spend recklessly, retail bankruptcy filings eased, helping to boost retailers of all types. But shoppers have been tightening their wallets in recent months as the credit crunch and inflation remain stubborn, leaving struggling retailers such as Bed Bath & Beyond even more vulnerable.
Bed Bath & Beyond has been struggling to turn a profit and cut costs after sales slumps were exacerbated by previous management’s new strategy. The company announced last August that it would close about 150 namesake stores and cut 20% of its workforce. It is also preparing more than $500 million in new financing.
Shares of Bed Bath & Beyond are trading at depressed levels and have been volatile. They shot up from $5.77 to $23.08 in a little over two weeks in August. The trades are reminiscent of last year’s meme stock boom, when out-of-favor companies suddenly became the darlings of investors with less capital.
But the stock retreated after Ryan Cohen, the billionaire co-founder of online pet product retailer Chewy Inc, which bought nearly 10% of Bed Bath & Beyond last March, sold his entire stake up.
Shares have hovered near 30 cents for the past few days. A year ago, shares were around $17.
Bed Bath & Beyond said it expects to process returns and exchanges for items purchased before Sunday in accordance with its usual policy by May 24. It also expects to accept gift cards, gift certificates and loyalty certificates until May 8. It will stop accepting coupons on Wednesday, April 26.
