NEW YORK – Bed Bath & Beyond – one of the first big-box retailers known for its seemingly endless offerings of linens, towels and kitchen gadgets – has filed for bankruptcy, after years of dismal sales and losses and many failed turnaround plans.
The embattled home goods chain filed the case Sunday in U.S. District Court in New Jersey and said it would begin an orderly reduction of its operations, while seeking a buyer for all or part of its business. In the bankruptcy filing, the retailer said it plans 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 websites will remain open to serve customers.
It listed assets and liabilities estimated at between $1 billion and $10 billion. The move comes after the company failed to secure funds to stay afloat.
In a statement, the Union, New Jersey-based company said it voluntarily filed the case “to implement an orderly liquidation of its business while conducting a limited marketing process to solicit interest in one or more several sales of all or part of its assets.”
Store closures will put thousands of jobs at risk. The company employed 14,000 workers, according to the court filing. This is considerably down from 32,000 in February 2022.
Bed Bath & Beyond said it secured a commitment of approximately $240 million in funding from Sixth Street Specialty Lending, Inc. to enable it to continue operating during the bankruptcy process.
“It’s the death of an icon. A lot of people have grown up with it, said Neil Saunders, managing director of GlobalData Retail. “It’s an institution in retail, but unfortunately being an institution doesn’t protect you from financial hardship.”
Founded in 1971, Bed Bath & Beyond had for years enjoyed its status as a big-box retailer that offered a huge selection of linens, towels and gadgets unmatched by department store rivals. He was among the first to introduce shoppers to many of today’s household items like the air fryer or the single-serve coffee maker, and his 15% to 20% coupons were ubiquitous.
But over the past decade, Bed Bath & Beyond has struggled with weak sales, largely due to its messy assortments and lagging online strategy that have made it difficult to compete with Target and Walmart, which both upgraded their home departments. with better quality linens and bedding. Meanwhile, online players like Wayfair have been luring customers in with affordable, on-trend furniture and decor items.
In late 2019, Bed Bath & Beyond tapped Target executive Mark Tritton to take the helm and turn sales around. Tritton soon reduced coupons and began introducing private labels at the expense of national labels, a strategy that proved disastrous for the retailer.
And the pandemic, which came soon after he arrived, forced the retailer to temporarily close its stores. He was never able to use the health crisis to pivot to a successful online strategy like others have, analysts said. And while many retailers struggled with supply chain issues a year ago, Bed Bath was among the most vulnerable, missing many of its top 200 selling items, including kitchen appliances and l personal electronics, during the 2021 holiday season.
The retailer ousted Tritton in June 2022 after two consecutive quarters of disastrous sales. In recent months, the company, under the leadership of recently appointed president and CEO Sue Grove, has returned to its original strategy of focusing on national brands, instead of pushing its own store brands. But the company has struggled to get suppliers to commit to delivering the goods due to the retailer’s financial difficulties.
During the past holiday season, stores ran out of many key items and lost many customers, a problem that continued to plague the retailer through the winter and spring.
The bankruptcy filing comes as the company’s shares fell even further as speculation of an imminent bankruptcy filing grew. Its financial performance also deteriorated. In late March, he noted that preliminary results showed a 40% to 50% drop in sales at stores open for 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 goods retailer had issued several warnings about a potential bankruptcy filing since the start of this year. In late January, he noted in a government filing that he was in default on his loans and did not have the funds to repay what he owed. The company had said the default forced it to consider various 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. The bankruptcy could offer a window into what’s to come in the retail sector, given the changing landscape and growing challenges in the US economy.
At the height of the pandemic, a number of retailers filed for Chapter 11 bankruptcy, including Neiman Marcus and JC Penney. But in 2022 there has been a respite in retail bankruptcy filings as buyers, fueled by government stimulus money and a pile of savings, spent with abandon, helping lift all kinds of retailers. But as credit tightens and inflation remains stubborn, buyers have tightened 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 cut costs after the previous management’s new strategies worsened the sales slump. The company announced last August that it would close about 150 of its namesake stores and reduce its workforce by 20%. It also lined up over $500 million in new funding.
Shares of Bed Bath & Beyond, which were trading at distressed levels, also had a turbulent run. It made a monstrous run from $5.77 to $23.08 in just over two weeks in August. The trading was reminiscent of the meme-stock craze of last year, when out-of-favour companies suddenly became the darlings of small-pocketed investors.
But the stock fell back to earth after Ryan Cohen, the billionaire co-founder of online pet products retailer Chewy Inc., which bought a nearly 10% stake in Bed Bath & Beyond last March, sold all his actions.
Shares have been hovering around 30 cents for the past few days. A year ago, shares were trading at around $17.
Bed Bath & Beyond said it plans to process returns and exchanges under its normal policies until May 24 for items purchased before Sunday. It also provides that gift cards, gift certificates and loyalty certificates will be accepted until May 8. It will stop accepting coupons on Wednesday.
AP Writer Bruce Shipkowski in Toms River, New Jersey contributed to this report.