Bed bath and beyond files for loss

new york
CNN
–

Bed Bath & Beyond, the 1990s and 2000s store for home-like items, filed for bankruptcy on Sunday.

“Thank you to all our loyal customers. “We have made the difficult decision to begin downsizing our operations,” a statement at the top of the company’s website said Sunday morning.

The company’s 360 Bed Bath & Beyond locations, along with 120 Buy BABY stores, will remain open for now, as will its websites. The company secured a $240 million loan to finance its operations during bankruptcy.

But store closing sales begin Wednesday, and Bed Bath & Beyond will close some stores. How many of them — or what happens to their 14,000 employees — depends on what happens next.

Filing for bankruptcy does not mean that a company is out of business. Many major US companies have filed for bankruptcy, using it to pay off debt and other unaffordable expenses. But even if Bed & Beyond emerges from bankruptcy, its future is far from guaranteed.

The company said it intends to sell some or all of its business. Bed Bath & Beyond will stop store closings if it can find a buyer. But if a buyer doesn’t come along, Bed Bath & Beyond could be completely liquidated and out of business.

Globaldata retail analyst Neil Saunders said the company could emerge from bankruptcy as an online-only retailer.

“Ultimately, if it emerges from bankruptcy, Bed Bath & Beyond will be a shadow of its former self,” he said.

Bed Bath & Beyond was the crown jewel of an era of so-called “category killers” — chains that dominated the retail category like Toys “R” Us, Circuit City and Sports Authority. Those companies eventually filed for bankruptcy as consumers turned away from giant specialty stores in favor of online options like Amazon.

Bed Bath & Beyond is known for its floor-to-ceiling stacks of pots and pans, towels, and bedding in its cavernous stores — and its ubiquitous 20% off coupons. The blue and white coupons became a pop culture icon, and millions of Americans carried them around in their cars, closets, and living rooms.

The company said customers will have Sunday, Monday and Tuesday to use the remaining 20% ​​off coupons. The company will stop accepting on Wednesday. Instead, Bed Bath & Beyond expects to offer “deep discounts” on its products as part of the exit sale.

The retailer has attracted many customers by selling name brands at discounted prices. Brands aspire to space in bed baths and on store shelves, knowing it leads to bigger sales. Additionally, the open store layout encouraged impulse buying: shoppers walked in to buy fresh foods and walked out with pillows, towels and other items.

Stores were convenient for shoppers around the winter holidays and back-to-school and college seasons, and Bed Bath & Beyond had strong baby and wedding registry business.

But the New Jersey-based company has been slow to respond to shopping changes and has struggled to woo customers who have defected to Amazon, Target and other chains.

Bed Bath & Beyond says in its bankruptcy filing that it has $5.2 billion in debt and only $4.4 billion in assets. It secured a $240 million bailout on Sunday to last long enough to close its stores and wind down its operations.

The company encouraged shoppers to look for the discounted items this weekend. Items purchased before Wednesday can be returned until May 24, but after Wednesday all sales will be final. The store will stop accepting gift cards on May 8.

In the year Founded in 1971 by Warren Eisenberg and Leonard Feinstein, two veterans of the discount retail industry in Springfield, New Jersey, the chain of small linen and bath stores—then called Bed ‘N Bath—first grew by selling designer bedding in the Northeast and California, then new. Trend. Unlike department stores, it did not depend on sales events to attract customers.

The company changed its name to Bed Bath & Beyond in 1987 to reflect its expanded merchandise and larger “superstores.” The company went public in 1992 with 38 stores and about $200 million.

“We saw the department store shake out and knew that specialty stores were going to be the next wave of retail,” Feinstein said in 1993. He said.

In the year By 2000, these figures had grown to 241 stores and $1.1 billion in annual sales. The 1,000th Bed Bath & Beyond store opened in 2009, when the chain reached $7.8 billion in annual revenue.

The company was something of an iconoclast. He spent little on advertising, relying on print coupons distributed in weekly newspapers to attract customers.

“Why would we give the customer a discount on an item they only want — not what we want to sell? We’d mail a coupon, and it would be much cheaper,” Eisenberg said in a 2020 New York Times interview.

The chain is known for letting store managers decide which products to stock, customizing their individual stores, and shipping products directly to stores instead of a central warehouse.

But as brick-and-mortar began to give way to e-commerce, Bed Bath & Beyond was slow to make the transition — a misstep since home decor is one of the most-bought categories online.

“We’ve missed the boat on the Internet,” Eisenberg said in a recent Wall Street Journal interview. (The co-founders are not involved with the company.)

Online shopping has weakened the need for bed linens and fan-favorite coupons as shoppers can find cheaper options on Amazon or browse a wider selection on sites like Wayfair (W).

Amazon and online shopping weren’t the only ones sinking Bed Bath & Beyond.

Walmart ( WMT ), Target ( TGT ), and Costco ( COST ) have grown over the past decade, drawing customers from Bed Base and beyond with low prices and a wide selection of merchandise. Discount chains like HomeGoods and TJ Maxx have also cut prices on bed linens and more.

Without the lowest price difference or wide selection, sales of Bed Bath & Beyond stagnated from 2012 to 2019.

Then the pandemic hit in 2020. While the company temporarily closed all stores, rivals such as Walmart were considered “essential retailers.” Sales are down 17 percent in 2020 and 15 percent in 2021.

What’s more, Bed & Beyond has gone through a variety of executives and turnaround strategies in recent years.

Former Target CEO Mark Triton took the helm in 2019 with investor support and a bold new strategy. Discount coupons and inventory from national brands for bed bath and more private label brands.

But this shift alienated customers loyal to big brands. The company fell behind on payments to vendors, and stores didn’t have enough merchandise to stock shelves. Triton in 2010 He stepped down as CEO in 2022.

Bed Bath & Beyond ( BBBY ) has teetered on the brink of bankruptcy for months.

In February, it avoided bankruptcy by completing a complex stock offering that provided both a quick cash injection and additional financing for the future to pay down its debt. That offering was backed by private equity group Hudson’s Bay Capital.

But Bed Bath & Beyond said last month it terminated its deal with Hudson’s Bay Capital for future financing and turned to the public market to raise money.

The company has also been downsizing to save money. It said earlier this year it would close about 400 locations but keep open profitable stores in key markets.

And the company tried to save money by not paying some employees who were laid off in closing stores.

Bed Bath & Beyond laid off 1,295 workers in New Jersey this month, just days before a new state law required severance pay — one week’s pay for each year of employment — for workers who lost their jobs.

All these moves were not enough to keep the once-dominant chain from bankruptcy.

And Bed Bath & Beyond is the latest retail chain to file for bankruptcy this year. Losses are piling up in the retail sector as interest rates rise and discretionary spending slows.

David’s Bridal, Party City, said Tuesday morning that mattress manufacturer Serta Simmons and Independent Pet Partners, a pet store retailer, filed for bankruptcy in recent weeks.