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Bed Bath and Beyond, the all-in-one store of the 1990s and 2000s, filed for bankruptcy on Sunday.
Thank you to all our loyal customers. We have made the difficult decision to close our operations,” the company said in a statement at the top of its website on Sunday morning.
The 360 Bed Bath & Beyond stores, as well as 120 BABY stores available through the BuyBuy program, will remain open for now. The company obtained a loan of 240 million dollars to finance its operations during the bankruptcy.
But in-store sales start Wednesday and Bed Bath & Beyond will close some stores. How much, or what happens to its 14,000 employees, depends on what happens next.
Filing for bankruptcy does not mean that the company closes. Many large American companies have filed for bankruptcy and cannot use it to get rid of debt and other expenses. But even after Bed & Beyond emerges from bankruptcy, its future is uncertain.
The company said it intends to sell some or all of its businesses. If Bed Bath & Beyond finds a buyer, it will postpone the store's closure. But if a buyer is not found, Bed Bath & Beyond is likely to face liquidation and bankruptcy.
Globaldata retail analyst Neil Saunders said the company could be an online retailer that could emerge from bankruptcy.
"If Bed Bath & Beyond finally comes out of bankruptcy, it 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" who dominated retail categories like Toys "R" Us, Circuit City, and Sports Authority. These companies eventually filed for bankruptcy as consumers abandoned big box specialty stores in favor of online options like Amazon.
© Provided by CNN. Chris Hammons unpacks a bag of items at Bed Bath & Beyond on September 23, 2009 in Dallas, Texas. -Jessica Rinaldi/Reuters
Bed Bath & Beyond is known for its pots and pans, floor-to-ceiling towels and linens in its expansive store, and 20% off coupons everywhere. Blue and white coupons have become a pop culture icon with millions of Americans hiding them in their cars, closets, and homes.
Customers will have Sunday, Monday and Tuesday to use the remaining 20% off coupon, the company said. The company will stop accepting them on Wednesday. Instead, Bed Bath & Beyond plans to offer "deep discounts" on its products as part of its outlet sale.
The retailer attracted a diverse clientele by selling well-known brands at discounted prices. Brands aspire to more than the bathroom and the shelf, knowing that it leads to more sales. In addition, the store's open floor plan encouraged impulse purchases, with shoppers coming in to purchase new merchandise and leaving with pillows, towels, and other items.
The stores were an integral part of the shopping experience during the winter holidays and school and college seasons, and Bed Bath & Beyond also had a strong wedding and baby registry business.
But the New Jersey-based company has been slow to respond to changes in shopping and has struggled to attract customers who flock to Amazon, Target and other chains.
Bed Bath & Beyond says in its bankruptcy filing that it has $5.2 billion in debt and $4.4 billion in assets. It raised $240 million in funding Sunday to close its stores and slow down operations.
The company encouraged shoppers to look for discounted items this week. Items purchased before Wednesday can be returned until May 24, but all sales after Wednesday are final and the store will stop accepting gift cards starting May 8.
The age of the supermarket
Founded in 1971 by Warren Eisenberg and Leonard Feinstein, two veteran discount retailers from Springfield, New Jersey, the chain of small lingerie and accessories stores, then known as Bed 'N Bath, sold designer bedding in the Northeast and California. , the new trend of the times. Unlike department stores, it doesn't rely on sales to attract customers.
The company changed its name to Bed Bath & Beyond in 1987 to reflect the expansion of the line and the growth of the "supermarket." The company was launched in 1992 with 38 stores and sales of nearly $200 million.
Feinstein said in 1993, "We saw department store reform and knew that specialty stores were going to be the next wave of retail." "This was the beginning of the bedding and tableware design process, and we saw a real window of opportunity."
© Provided by CNN. Shoppers look at items in a shopping cart at a Bed, Bath and Other store in New York on January 18, 1994. -Mark Peterson/Corbis/Getty Images
By the year 2000, these numbers 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 somewhat rebellious. There was very little spending on advertising, relying on print coupons distributed in weekly newspapers to attract customers.
“Why don't we tell the customer we're going to offer a discount on the item they want, not the item we want to sell? We will mail the coupon and it will be much cheaper,” Eisenberg told The New York Times in 2020.
The chain is known for giving store managers the autonomy to decide which products to stock, allowing them to set up individual stores and ship products directly to stores instead of a central warehouse.
The rise of online shopping
But as brick-and-mortar businesses began to give way to e-commerce, Bed Bath & Beyond was slow to change, a mistake given that home décor is one of the most-bought categories online.
"We missed the boat on the Internet," Eisenberg said in a recent interview with the Wall Street Journal. (Affiliates are not affiliated with the company.)
Online shopping has also reduced the fan-favorite bed bath and its appeal beyond coupons, as shoppers can find cheaper options on Amazon or browse a wider selection on sites like Wayfair (W).
However, it's not just Amazon and online stores that have destroyed the bed and bath.
Walmart (WMT), Target (TGT), and Costco (COST) have grown over the past decade, while Bed Base and Beyond have been able to attract 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 features like low prices or a great selection, sales of bathtubs and more have stagnated from 2012 to 2019.
© Provided by CNN. Shoppers examine cleaning products while shopping at Bed Bath & Beyond in New York, April 13, 2011 – Lucas Jackson/Reuters
Then the pandemic struck in 2020. The company temporarily closed all of its stores while competitors deemed "major retailers" like Walmart stayed open. Sales are down 17 percent in 2020 and 15 percent in 2021.
In addition, Bed Bath & Beyond has gone through several management changes and restructuring in the past year.
Former Target CEO Mark Triton took over the company in 2019 with the support of investors and a bold new strategy. In favor of his own brand, Bed Bath & Beyond, he clipped coupons and items from national brands.
But this change has made customers loyal to big brands. The company was behind in payments to suppliers and stores were running out of stock. Triton in 2010 Resigned as CEO in 2022.
Fight to avoid losses
Bed Bath & Beyond (BBBY) has been on the brink of bankruptcy for months.
In February, it avoided bankruptcy by completing a complex stock offering that promised an immediate source of cash and additional cash to pay off future debt. The proposal is backed by Hudson's Bay Capital Private Equity.
But last month Bed Bath & Beyond finalized a deal with Hudson's Bay Capital for future financing and turned to the public market to raise money.
The company is also cutting back to save money. Earlier this year, the company said it would close some 400 outlets but would maintain profitable stores in key markets.
And the company tried to save money by not paying certain workers who were laid off during store closures.
Bed Bath & Beyond laid off 1,295 workers in New Jersey this month, days before the implementation of a new state law that requires severance pay, equal to a week's wages for every year worked, for workers who lost their jobs.
However, all these measures were not enough to save the once dominant chain from bankruptcy.
And Bed Bath & Beyond is the latest retailer to file for bankruptcy this year. As interest rates rise and rational spending declines, the retail sector faces losses.
David's Bridal, Party City, said Tuesday morning that mattress maker Serta Simmons and Independent Pet Partners, a pet retailer, have filed for bankruptcy in recent weeks.
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