Bed Bath & Beyond files for bankruptcy

Bed Bath & Beyond filed for Chapter 11 bankruptcy Sunday, a move widely expected after the housewares chain was unable to raise $300 million in capital amid plunging sales and share price.

“Bed Bath & Beyond Inc. today announced that it and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey to implement an orderly wind down of its businesses while conducting a limited marketing process to solicit interest in one or more sales of some or all of its assets,” the company said in a statement.

“Millions of customers have trusted us through the most important milestones in their lives — from going to college to getting married, settling into a new home to having a baby,” said CEO Sue Gove in the release. “We deeply appreciate our associates, customers, partners, and the communities we serve, and we remain steadfastly determined to serve them throughout this process. We will continue working diligently to maximize value for the benefit of all stakeholders.”

The 52-year-old specialty retailer said it had gotten a commitment of around $240 million in debtor-in-possession financing from Sixth Street Specialty Lending to help support operations during the Chapter 11 process. Its 360 stores, as well as its websites and its 120 buybuy BABY locations, “will remain open and continue serving customers as the Company begins its efforts to effectuate the closure of its retail locations,” it said.

The Union, N.J.-based chain’s downfall was no surprise. Once known for its overstuffed shelves and vast kitchenware selection, it suffered a years-long decline set off by bad investments, patchy inventory, and dwindling customer interest.

In early January, the company posted a $393 million loss for the quarter that ended Nov. 26, pushing fiscal year-to-date losses to more than $1.1 billion. Gove said at the time that Bed Bath & Beyond would slash costs by $80 million to $100 million and lay off an undisclosed number of employees.

Then, on Jan. 26, the company said in a filing with securities regulators that it “does not have sufficient resources to repay” loans of $550 million from JP Morgan and another $375 million from investment firm Sixth Street. A week later, Bed Bath & Beyond reported it missed a $28 million interest payment on its bonds and announced it was closing an additional 87 stores on top of 150 it had shuttered in August.

The company was able to delay an impending bankruptcy in February, when it struck a $1 billion share-sale deal with hedge fund Hudson Bay Capital Management and other investors after it failed to convince a bank to lend funds. But the deal fell apart last month, when Bed Bath & Beyond disclosed that comparable store sales plunged 40 to 50 percent year-over-year in the fourth quarter.

Gove announced earlier this month that the company was preparing for bankruptcy, and on Thursday, it submitted a loan-default filing that included another bankruptcy warning.

Once an icon

Founded in 1971, Bed Bath & Beyond was one of the first big specialty retailers and became the go-to destination for housewares, small kitchen appliances, wedding registries, and college dorm supplies. But business began to cool in 2010, as Amazon, Wayfair, Walmart, Target and other brands bolstered their homeware lines. (Amazon founder Jeff Bezos owns The Washington Post.)

Meanwhile, the company racked up some misses, such as its acquisition of One Kings Lane for $12 million in 2016. Bed Bath & Beyond sold the online home decor company in 2020.

Neil Saunders, managing director of analytics company GlobalData, said shortly before the Chapter 11 filing that the company’s supply chain operations were poorly managed, with some shelves stuffed to the brim while others were bare. The coupons that are nearly synonymous with Bed Bath & Beyond became a necessary evil, bringing in customers but hurting the company’s bottom line.

“It takes a long time to change a customer’s focus, let alone pull the needle out with regard to these millions of ‘X’ percent off coupons that for years had been in people’s mailboxes,” said Mark Cohen, director of retail studies at Columbia University.

Analysts also pointed to moves made by Mark Tritton, who took over as CEO in 2019. Under his management, Bed Bath & Beyond emphasized its own private-label products and spent $1 billion on a stock buyback — both ill-advised decisions, Cohen said. The buyback left the company with little cash on hand.

Bed Bath & Beyond did get a boost during the wave of consumer spending during the pandemic — when Americans spent more time at home — but it failed to capitalize on the momentum, Saunders said. When the economic climate shifted and stubbornly high inflation reduced discretionary purchases, the company “tumbled in a way that no other retailer had seen,” he added.

By the latter half of 2022, many vendors decided it was too risky to give the company product on credit, compounding its inventory problems.

Consumers noticed: Foot traffic at Bed Bath & Beyond dropped sharply — falling by 26.5 percent in December year over year, according to analytics firm Placer.ai.