Bed Bath & Beyond files for bankruptcy

() — Bed Bath & Beyond, the store that ostensibly had everything for your home during the 1990s and 2000s, filed for bankruptcy Sunday. The company said it would sell its merchandise and then go out of business.

Thank you to all our loyal customers. We made the difficult decision to start closing our operations”, read this Sunday morning in a statement at the top of the company’s website.

The company’s 360 Bed Bath & Beyond locations, along with its 120 buybuy BABY stores, will remain open for now, as will its websites. But store closing sales will begin this Wednesday and the company will liquidate all of its inventory.

“Millions of customers have trusted us during the most important moments of their lives, from going to college to getting married, settling into a new home and having a baby,” said Sue Gove, CEO of Bed Bath & Beyond, in a statement. . “We deeply appreciate our associates, customers, partners and the communities we serve, and we remain steadfastly determined to serve them throughout this process.”

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

Chris Hammons unloads a bag of items he bought at a Bed Bath & Beyond store in Dallas, Texas on September 23, 2009. (Credit: Jessica Rinaldi/Reuters)

Bed Bath & Beyond became known for the pots and pans, towels and linens stacked from floor to ceiling in its cavernous stores, and for its ubiquitous 20% off coupons. Blue and white coupons became something of a pop culture symbol, and millions of Americans ended up hiding them in their cars, closets, and basements.

The company said customers will have Sunday, Monday and Tuesday to use their remaining 20% ​​off coupons. The company will stop accepting them on Wednesday. Instead, Bed Bath & Beyond hopes to offer “deep discounts” on its products as part of its go-of-business sales.

The retailer attracted a wide range of customers by selling well-known brands at discounted prices. The brands coveted a spot on Bed Bath & Beyond’s shelves, knowing it would generate big sales. In addition, the open store layout encouraged impulse purchases: shoppers went in to buy new dishes and left with pillows, towels, and other items.

The stores were a fixture for shoppers during winter break and back-to-school and college seasons, and Bed Bath & Beyond also had a strong wedding and baby registry business.

But the New Jersey-based company was slow to respond to buying shifts and struggled to attract customers who moved to Amazon, Target and other chains.

In its bankruptcy filing, Bed Bath & Beyond said it had debt of $5.2 billion and assets of just $4.4 billion. It raised $240 million in financing Sunday to stay afloat long enough to close its stores and wind down its operations.

The company encouraged shoppers to look for its discounted merchandise later this week. Items purchased before Wednesday can be returned through May 24, but all sales after Wednesday are final. The store will stop accepting gift cards on May 8.

The era of supermarkets

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 in the Northeast. and in California selling designer bedding, a new trend at the time. Unlike department stores, it did not rely 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 around $200 million in sales.

“We had seen the department store shakeup and knew that specialty stores were going to be the next wave of retail sales,” said Feinstein in 1993. “It was the beginning of the designer’s approach to bedding and homewares and we saw a real window of opportunity.”

Customers browsing items in shopping carts at a Bed, Bath & Beyond store in New York City on January 18, 1994. (Credit: Mark Peterson/Corbis/Getty Images)

By the year 2000, those numbers increased to 241 stores and $1.1 billion in annual sales. The 1,000th Bed Bath & Beyond store opened in 2009, when the chain achieved $7.8 billion in annual sales.

The company was somewhat iconoclastic. It spent little on advertising, relying instead on print coupons distributed in weekly newspapers to attract customers.

“Why not just tell the customer that we’re going to give them a discount on the item they want, not the one we want to put up for sale? We will send a coupon in the mail and it will be much cheaper,” Eisenberg said in a 2020 New York Times interview.

The chain was known for giving store managers autonomy to decide what products to stock, allowing them to customize their individual stores and ship products directly to stores instead of a central warehouse.

The rise of online shopping

But as brick-and-mortar stores began to give way to e-commerce, Bed Bath & Beyond was slow to make the transition, a misstep compounded by the fact that home décor is one of the most commonly purchased categories online.

“We missed the train on the Internet”, said Eisenberg in a recent interview with The Wall Street Journal. (The co-founders are no longer involved with the company.)

Online shopping also weakened the appeal of fan-favorite Bed Bath & Beyond coupons, because consumers could find many cheaper alternatives on Amazon or browse a wider selection on sites like Wayfair.

However, it wasn’t just Amazon and online shopping that brought Bed Bath & Beyond down.

Walmart, Target and Costco have grown over the past decade and have been able to attract Bed Bath & Beyond customers with lower prices and a broader range of products. Discount chains like HomeGoods and TJ Maxx also slashed prices at Bed Bath & Beyond.

Without the differentiators of lower prices or broader selection, Bed Bath & Beyond sales stagnated from 2012 to 2019.

Customers inspect cleaning supplies while shopping inside a Bed Bath & Beyond store in New York on April 13, 2011. (Credit: Lucas Jackson/Reuters)

Then the pandemic struck in 2020. The company temporarily shuttered all of its stores, while rivals deemed “essential retailers” like Walmart stayed open. Sales sank 17% in 2020 and 15% in 2021.

Additionally, Bed Bath & Beyond rotated through several different executives and turnaround strategies in recent years.

Former Target executive Mark Tritton took over in 2019 with backing from investors and a bold new strategy. He cut coupons and inventory from national brands in favor of Bed Bath & Beyond’s own private brands.

But this change alienated customers who were loyal to big brands. The company also fell behind in payments to vendors, and stores did not have enough merchandise to stock the shelves. Tritton stepped down as CEO in 2022.

The fight to avoid bankruptcy

Bed Bath & Beyond was on the brink of bankruptcy for months.

In February, he was able to avoid it by completing a complex stock offering that gave him both an immediate injection of cash and a promise of more funds in the future to pay down his debt. That offer was backed by private equity group Hudson Bay Capital.

But Bed Bath & Beyond said last month that it had terminated the deal with Hudson Bay Capital for future funding and had turned to the public market to try to raise funds.

The company was also downsized to save money. Earlier this year he said he would close about 400 locations but would keep profitable stores open in key markets.

And the company tried to save money by not paying severance pay to some workers laid off in store closings.

Bed Bath & Beyond laid off 1,295 workers in New Jersey this month, just days before a new state law went into effect requiring severance pay — equal to one week’s pay for every year of employment — for workers who they lose their job.

However, all these moves were not enough to keep the once-dominant chain out of bankruptcy.

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

David’s Bridal, Party City, Tuesday Morning, mattress maker Serta Simmons and Independent Pet Partners, a pet retailer, have filed for bankruptcy in recent weeks.