Bed Bath & Beyond, a well-known big box retailer offering a wide range of home goods, has filed for bankruptcy protection due to years of poor sales and losses, as well as failed turnaround plans. The company made the filing in a US District Court in New Jersey and plans to begin an orderly wind-down of its operations while seeking a buyer for some or all of its businesses. The retailer anticipates closing all of its stores by June 30, putting thousands of jobs at risk. The company employed 14,000 workers, down from 32,000 as of February 2022.
Bed Bath & Beyond has secured a commitment of approximately $240m in financing from Sixth Street Specialty Lending, Inc to allow it to continue operating during the bankruptcy process. However, the store closings will still put many jobs at risk. The company’s 360 Bed Bath & Beyond stores and 120 Buy Buy Baby sites, as well as its websites, will remain open for now.
Founded in 1971, Bed Bath & Beyond was known for its vast selection of sheets, towels, and gadgets that were unmatched by department store rivals. It was among the first to introduce shoppers to many household items like the air fryer or single-serve coffee maker. However, for the last decade, the company struggled with weak sales due to its messy assortments and lagging online strategy that made it hard to compete with the likes of Target and Walmart. Meanwhile, online players like Wayfair have lured customers with affordable and trendy furniture and home décor.
In late 2019, Bed Bath & Beyond hired Target executive Mark Tritton to turn around sales. Tritton quickly reduced coupons and started to introduce store label brands at the expense of national labels, a strategy that proved disastrous for the retailer. The coronavirus pandemic forced the retailer to temporarily close its stores, and it was never able to pivot to a successful online strategy as others had.
The company ousted Tritton in June 2022 after two back-to-back quarters of disastrous sales. In recent months, the company went back to its original strategy of focusing on national brands, instead of pushing its own store labels. But the company has had a hard time having suppliers commit to delivering merchandise because of the retailer’s financial woes.
Bed Bath & Beyond joins a growing list of retailers that have filed for bankruptcy so far this year, including Party City and David’s Bridal. The bankruptcy could offer a window into what’s to come in the retail industry, given the changing landscape and the increasing challenges in the US economy.
During the depths of the pandemic, a number of retailers filed for Chapter 11 bankruptcy, including Neiman Marcus and JCPenney. But in 2022, there was a respite in retail bankruptcy filings as shoppers, flush with government stimulus money and a pile of savings, spent with abandon, helping to lift all types of retailers. However, as credit tightens and inflation remains stubborn, shoppers have been tightening their purse strings in recent months, leaving struggling retailers like Bed Bath & Beyond more vulnerable.
Bed Bath & Beyond had been trying to turn around its business and slash costs after the previous management’s new strategies worsened a sales slump. The company announced last August that it would close about 150 of its namesake stores and slash its workforce by 20%. It also lined up more than $500m of new financing.
Bed Bath & Beyond’s shares, which were trading at distressed levels, have also been turbulent. They made a monstrous run from $5.77 to $23.08 in a little more than two weeks in August. The trading was reminiscent of last year’s meme-stock craze when out-of-favor companies suddenly became darlings of smaller-pocketed investors.
But the stock fell back to Earth after Ryan Cohen, the billionaire co-founder of online pet-products retailer Chewy Inc, who purchased a nearly 10% stake in Bed Bath & Beyond last March, sold off all his shares. Shares were hovering close to 30 cents in the past few days. A year ago, shares were trading at around $17.
Bed Bath & Beyond said it expects to process returns and exchanges in accordance with its usual policies until May 24 for items purchased prior to Sunday. It also anticipates gift cards, gift certificates, and loyalty certificates will be accepted through May 8. It will stop accepting coupons on Wednesday, April 26.