Retailer will seek a buyer for some or all of its assets
It’s the end of the road for Bed Bath & Beyond Inc., a company that was once a shining star of U.S. retail.
The troubled home-goods retailer (BBBY) filed for chapter 11 on Sunday, after spending several months teetering on the brink of bankruptcy. The company said it aims to achieve an orderly wind down of its operations, while also seeking to find an interested buyer for some or all of its assets. It has $240 million of debtor-in-possession financing to provide the liquidity needed to support its operations through the process.
“While the company has commenced a liquidation sale, Bed Bath & Beyond Inc. intends to use the chapter 11 proceedings to conduct a limited sale and marketing process for some or all of its assets,” it said in a statement.
The company’s network of 360 Bed Bath & Beyond stores and 120 buybuy Baby stores and websites will remain open and continue serving customers while it looks to close retail locations. The company will honor commitments to customers, employees and vendors.
“In the event of a successful sale, the company will pivot away from any store closings needed to implement a transaction,” the company said. The stock closed Friday at 28 cents.
The filing is no big surprise.
In January, Matthew Debbage, CEO for the Americas and Asia at the credit-monitoring and risk-management company Creditsafe, weighed in on Bed Bath & Beyond’s demise. “This isn’t what anyone wants to see happen,” he told MarketWatch, pointing to the company’s history as a popular and well-regarded retailer.
Founded by Warren Eisenberg and Leonard Feinstein, Bed Bath & Beyond opened its first two stores in 1971, in Springfield, N.J., and Cedarhurst, N.Y. The company grew exponentially over the following decades, opening its 100th store, in Irvine, Calif., in 1996 and its 200th, in Palm Beach Gardens, Fla., less than three years later.
The company also operated under the names Harmon, Harmon Face Values or Face Values.
In an interview with the Wall Street Journal, Eisenberg, who went on to become co-CEO with Feinstein, described the deliberate clutter that was a hallmark of the stores. “If you came to the store to buy a mattress pad, there was no way that you were going to walk out with only a mattress pad,” Eisenberg said.
Bed Bath & Beyond enjoyed great success by offering name brands at a discount. With a devoted customer base, the company firmly established itself as a household name, and its stock hit an all-time high of $80.82 on Jan. 3, 2014. Recent years, however, have been marked by strategic missteps, cash burn, challenging underlying business trends and the impact of the COVID-19 pandemic.
By the start of 2023, the writing was on the wall. On Jan. 10, the company announced the closure of almost 130 stores just days after saying it might need to declare bankruptcy. The possibility that the sometime meme-stock darling could file for bankruptcy sent Bed Bath & Beyond’s stock sinking toward a 30-year low. The stock fell even more when it disclosed in January that it was in default on certain loans.
What went wrong? Experts say that the company needed a more timely and stronger focus on e-commerce and that the recent revamp of Bed Bath & Beyond stores came too late to save the company. Whereas rival Target Corp. (TGT) has been able to anticipate and successfully tap into prevailing retail trends, Bed Bath & Beyond was left behind. The rise of online retail powerhouse Amazon.com. Inc. (AMZN) made life even more difficult for the retailer.
Set against this backdrop, Bed Bath & Beyond in September reported a second-quarter loss that was much bigger than expected, prompting Wells Fargo analyst Zachary Fadem to describe the company’s results as “indefensible.”
Bed Bath & Beyond also had to contend with leadership change while wrestling with a tough business environment. In June 2022, Mark Tritton was ousted as CEO after less than three years in the role. Tritton’s attempts to breathe new life into the company were hampered by supply-chain disruptions, labor shortages, inflation and the pandemic, according to Carol Spieckerman, president of the retail-advisory firm Spieckerman Retail.
Tritton was hired as CEO in 2019 as Bed Bath & Beyond looked to replicate the success of Target, where he had served as chief merchandising officer. At Target, Tritton earned a reputation for launching successful private-label brands, and news of his appointment initially sent Bed Bath & Beyond’s stock rocketing.
But the honeymoon was short-lived. “He really had a two-pronged focus, [one part of] which was creating multibrand private brand portfolios,” Spieckerman told MarketWatch last year, noting that this was an ambitious strategy that takes time to implement. “Focusing on cleaning up the stores … seemed like an obvious move, but with COVID, a digital-forward strategy would have made more sense,” she added.
Current CEO Sue Gove paid homage Sunday to the company’s employees and once-loyal customers, who have “trusted through the most important milestones in their lives — from going to college to getting married, settling into a new home to having a baby.”
The stock, meanwhile, has been choppy of late. Last week, it enjoyed a three-day meme-like rally, and even rose 35% on Wednesday before abruptly selling off on Thursday.
That was after a steep selloff the week earlier, after it disclosed a sale of more than 100 million shares.