Bed Bath & Beyond files for bankruptcy after failed turnaround plans

Bed Bath & Beyond Inc. filed for Chapter 11 bankruptcy protection on Sunday after the home goods retailer failed to secure funding to stay afloat, and has begun liquidation sales.

The home goods retailer, which became popular in the 1990s as a shopping destination for couples making wedding registries and planning new babies, has seen a decline in demand in recent years as its merchandising strategy to sell more store-brand products failed. .

Last year’s move to abandon that strategy, and bring in other national brands recognized by shoppers, showed no signs of working, with the company reporting a loss of about $393 million US after sales fell 33 percent for the quarter ended November 26. .

“It’s the death of an icon. A lot of people have grown up,” said Neil Saunders, managing director of GlobalData Retail. “It is an institution in retail, but unfortunately as an institution it does not protect you from financial problems.”

The store closures will put thousands of jobs at risk. The company employs 14,000 people, according to court filings. That is a drastic drop from 32,000 in February 2022.

Canadian operations ceased

The bankruptcy filing comes as Bed Bath & Beyond’s Canadian operations are going out of business.

The Canadian division, which operates 54 Bed Bath & Beyond stores and 11 buybuy BABY stores, is bankrupt, a court filing posted on the Alvarez & Marsal consulting website in February showed.

The Union, NJ-based retailer filed for bankruptcy in the District of New Jersey court on Monday morning, listing both estimated assets and liabilities in the range of $1 billion and $10 billion US, according to court filings.

The company said it has received a commitment of approximately US$240 million in debt-in-possession financing from Sixth Street Specialty Lending Inc, according to a statement.

When a retailer has begun a liquidation sale, it intends to use the Chapter 11 process to conduct a limited sale and marketing process for some or all of its assets, according to the statement.

The company added that 360 Bed Bath & Beyond and 120 buybuy BABY stores and websites will remain open and continue to serve customers as they begin efforts to close those retail locations.

In its bankruptcy filing, the retailer said it plans to close all of its stores by June 30.

In January, the company raised doubts about its ability to continue as a concern, just months after announcing more than $500 million in new funding, as well as job cuts and 150 store closures.

Years of declining sales

In February, the embattled retailer had planned to raise around $1 billion US through an offering of preferred shares and warrants to avoid bankruptcy.

The company was able to raise US$360 million from a complex deal that helped pay down debt and interest payments on senior notes.

But Bed Bath & Beyond ended the deal in late March and announced plans to sell $300 million in shares, warning it could go bankrupt if it can’t secure the funds.

Founded in 1971, Bed Bath & Beyond has for years been a big-box retailer that offers a wide selection of bedding, towels and gadgets unmatched by its department store competitors. It’s one of the first to introduce shoppers to current household items like air fryers or single-serve coffee makers, and 15 to 20 percent coupons are everywhere.

But over the past decade, Bed Bath & Beyond has struggled with weak sales, largely because of a lackluster assortment and lagging online strategy that has made it difficult to compete with Target and Walmart, both of which have completed home departments. with higher bedding and bedding. Meanwhile, online players like Wayfair have been luring customers with affordable and trendy furniture and home decor.