Bed Bath & Beyond filed for Chapter 11 bankruptcy protection Sunday after its recent efforts to keep the company failed. The remaining 360 stores and 120 Buybuy Baby locations will stay open, at least until the close of business and all assets are liquidated. Close-out sales will start Wednesday. Bed Bath & Beyond previously said all Harmon FaceValue stores will be closed in January.
The home goods retailer warned that bankruptcy was on the horizon in January, after a terrible holiday season, notes CNBC. Shares closed at just 29 cents on Friday, compared to last April, when the stock traded at about $20 a share. According to court filings, Bad Bath & Beyond had about $4.4 billion in assets and $5.2 billion in debts as of November. The company employs about 14,000 non-seasonal workers.
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“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,” CEO Sue Gove said in a statement Sunday. “Our teams have worked with incredible purpose to support and strengthen our beloved banners, Bed Bath & Beyond, and buybuy BABY.” Six Street will lend Bed Bath & Beyond $240 million in debtor-in-possession financing to help the company keep operating during the bankruptcy process.
Bed Bath & Beyond was established in 1971, with its first stores in New York and New Jersey. The company went public in 1992, and there were over 1,000 stores nationwide by 2010. Shoppers enjoyed using the famous 20% off coupons for towels, toasters, and other home goods. But like many retailers, it struggled to compete against the Internet, and retailers like Walmart and Target.
Its downfall was a slow process though and could be traced to its entrance into the debt market in 2014 to buy back stock and fend off activist investors. This did not work as three activist investors eventually got four new board members and a new CEO, former Target CEO Mark Tritton, in 2019, notes the New York Times. The work culture at the company changed, and revenue fell to $2.6 billion in 2020. That was the same year the company began cutting back on the 20% coupons and pulled items from stores.
The road to bankruptcy accelerated, as consumers began slowing down their spending after the pandemic. In August, the company planned another restructuring, with 150 stores closing and more layoffs. A few days later, CFO Gustavo Arnal died, with his death ruled a suicide. In February, the company avoided bankruptcy one more time when it made a public stock offering to raise over $1 billion, with the support of Hudson Bay Capital Management. That deal was only in place as long as Bed Bath’s stock stayed at $1 a share or more. The deal was canceled when the stock kept falling, leading to Sunday’s decision.
“Thank you to all of our loyal customers,” reads a statement on the Bed Bath website. “We have made the difficult decision to begin winding down our operations. Bed Bath & Beyond and Buybuy Baby stores remain open to serve you.”
