Ayyyeee…. What’s Goodie Everyone. So I got some tea and it involves Bed Bath and Beyond filing for bankruptcy.
Bed Bath & Beyond filed for Chapter 11 bankruptcy Sunday. 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.
The Union, New Jersey based chain delayed 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 in the fourth quarter.
The chain’s downfall has been a long time coming, industry experts say. The 52 year old specialty retailer, once known for its overstuffed shelves and vast kitchenware selection, has suffered a years-long decline set off by bad investments, patchy inventory and dwindling customer interest.
The company started off the year with bad news, posting on January 10th a $393 million loss for the quarter that ended Nov. 26, pushing its fiscal year to date losses to more than $1.1 billion. After delivering that news, Gove said Bed Bath & Beyond would slash costs by $80 million to $100 million and lay off an undisclosed number of employees. Then, on January 26th, 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.
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.
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. 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.
CEO Sue Gove said earlier in April that the company was preparing for bankruptcy, and on Thursday, it submitted a loan default filing that included another bankruptcy warning.
Credit: The Washington Post, New York Times.
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