The Union, NJ-based chain staved off 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 to a bank that will lend funds. But the deal fell through last month, when Bed Bath & Beyond disclosed that comparable store sales fell 40 to 50 percent year-over-year in the fourth quarter.
The fall of the chain has been a long time coming, industry experts say. The 52-year-old specialty retailer, once known for its overstuffed shelves and wide selection of kitchen appliances, has suffered a year of decline due to poor investments, patchy inventory and shrinking customer interest.
CEO Sue Gove said earlier this month that the company was preparing for bankruptcy, and on Thursday, it submitted a loan-default filing that included another bankruptcy warning.
The company started the year with bad news, posting on January 10 a $393 million loss for the quarter ended November 26, pushing its fiscal year-to-date losses over of $ 1.1 billion. After delivering that news, Gove said Bed Bath & Beyond would reduced costs by $80 million to $100 million and laid off an undisclosed number of employees.
Then, on January 26, the company said in a filing with securities regulators that it “does not have sufficient resources to repay” the loans in $550 million from JP Morgan and another $375 million from Sixth Street investment firm. A week later, Bed Bath & Beyond reported unpaid $28 million in interest on its bonds and announced it was closing an additional 87 stores on top of the 150 it closed in August. .
Founded in 1971, Bed Bath & Beyond was one of the first big ones specialty retailers and has become a destination for homewares, small kitchenware, wedding registries and college dorm supplies. but Business began to cool in 2010, as Amazon, Wayfair, Walmart, Target and other brands strengthened their homeware lines. (Amazon founder Jeff Bezos owns The Post.)
On the other hand, the company racked up some misses, such as its acquisition of One Kings Lane for $12 million in 2016. Bed Bath & Beyond was sold to the online home decor company in 2020.
Neil Saunders, managing director of analytics company GlobalData, said the company’s supply chain operations were poorly managed, with some shelves packed to the brim while others were bare. Coupons almost identical to Bed Bath & Beyond have become a necessary evil, bringing in customers but hurting the company’s bottom line.
“It takes a long time to change the focus of a customer, let alone pull the needle on these millions of ‘X’ percent coupons that for years have been in the mailboxes of people,” said Mark Cohen, director of retail studies at Columbia University.
Analysts also pointed to the moves made by Mark Tritton, who took over as CEO in 2019. Under his leadership, Bed Bath & Beyond emphasized its own private label products and spent $1 billion on buying stock – both bad decisions, says Cohen. The buyback left the company with less cash on hand.
Bed Bath & Beyond gets a boost in consumer spending during the pandemic – when Americans spend more time at home – but it failed to capitalize on the momentum, Saunders said. When the economic climate changed and stubbornly high inflation reduced discretionary purchases, the company “collapsed in a way that no other retailer had seen,” he added.
In the latter half of 2022, many vendors decided it was too risky to give the company’s product on credit, adding to its inventory problems.
Consumers take notice: Bed Bath & Beyond’s foot traffic has dropped dramatically — falling 26.5 percent in December year-over-year, according to analytics firm Placer.ai.