Bed Bath & Beyond Inc. filed for Chapter 11 bankruptcy protection on Sunday after the home goods retailer failed to secure funds to stay afloat, and has begun a liquidation sale.
The home goods retailer, which shot to popularity in the 1990s as a go-to shopping destination for couples making wedding registries and planning for new babies, has seen demand drop off in recent years as its merchandising strategy to sell more store-branded products flopped.
Last year’s moves to abandon that strategy, and to bring in more national brands that shoppers recognize, had not shown signs of working, with the company reporting a loss of about $393 million US after sales plunged 33 per cent for the quarter ending Nov. 26.
“It’s the death of an icon. A lot of people have grown up with it, ” said Neil Saunders, managing director of GlobalData Retail. “It’s an institution in retailing, but unfortunately being an institution doesn’t protect you from financial woes.”
Canadian operations winding down
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 insolvent, a court filing posted on the website of consultancy Alvarez & Marsal in February showed.
The Union, N.J.-based retailer filed for bankruptcy in a District of New Jersey court on Sunday morning, listing both its estimated assets and liabilities in the range of $1 billion US and $10 billion US, according to a court filing.
The company said that it has received a commitment of approximately $240 million US in debtor-in-possession financing from Sixth Street Specialty Lending Inc, according to a statement.
While the retailer has begun a liquidation sale, it intends to use the Chapter 11 proceedings to conduct a limited sale and marketing process for some or all of its assets, according to the statement.
The company added that its 360 Bed Bath & Beyond and 120 buybuy BABY stores and websites will remain open and continue serving customers as it starts efforts to effect the closure of its retail locations.
In January, the company raised doubts about its ability to continue as a going concern, just months after it announced more than $500 million US in new financing, as well as job cuts and 150 store closures.
Failed turnaround plans
In February, the embattled retailer had planned to raise around $1 billion US through the offering of preferred stock and warrants to avoid bankruptcy.
The company was able to raise $360 million US from the complex deal helping it pay loan defaults and interest payments for senior notes.
But Bed Bath & Beyond terminated the deal in late March and announced plans to sell $300 million US worth of its shares, warning it might have to file for bankruptcy if it could not secure the funds.
The company had 32,000 employees as of Feb. 26, 2022, but that number has come down since then as the retailer has slashed jobs.
Founded in 1971, Bed Bath & Beyond had for years enjoyed its status as a big box retailer that offered a vast selection of sheets, towels and gadgets unmatched by department store rivals. It was among the first to introduce shoppers to many of today’s household items like the air fryer or single-serve coffee maker, and its 15 to 20 per cent coupons were ubiquitous.
But for the last decade or so, Bed Bath & Beyond struggled with weak sales, largely because of its messy assortments and lagging online strategy that made it hard to compete with the likes of Target and Walmart, both of which have spruced up their home departments with higher quality sheets and beddings. Meanwhile, online players like Wayfair have lured customers with affordable and trendy furniture and home decor.