“Bed Bath & Beyond declares bankruptcy after struggling to cover debts and finance operations”

The American chain of household items and decoration Bed Bath & Beyond has declared bankruptcy this weekend, after years of difficulties to cover outstanding debts and finance its operations. This chronicle of a death foretold is reflected in its website.

The company explained in a statement that it has received the commitment from the lender Sixth Street Specialty Lending to receive 240 million dollars (more than 218 million euros) that will allow them to keep their stores and websites open in this process. The New Jersey company has 360 Bed Bath & Beyond and 120 Buybuy Baby stores.

“Millions of clients have trusted us throughout the most important milestones in their lives, from going to university to getting married, moving into a new home and having a baby”, recalled its president and CEO, Sue Govewho promised that they will continue to work to maximize the benefit of all shareholders.

Bed Bath & Beyond has detailed, indicates Efethat the bankruptcy declaration has been made voluntarily to carry out an orderly liquidation of its businesses while carrying out “a limited marketing process to solicit interest in one or more sales of some or all of its assets.”

The retail chain’s sales fell sharply last year and the company had found it difficult to refinance debts it was unable to satisfy. The firm also experienced several stock market blows by becoming one of the favorite bets of many small investors and speculators who coordinate on internet forums. It became what the market called meme action. Its shares, since their last maximum, in January 2021, accumulate a collapse of more than 94%.

Last February, he announced several drastic decisions: the sale of shares for a value of 1,000 million dollars and the closure of 150 stores, which are already added to the persianazo of many others (in total 400). He kept half of what he had a year ago.

The financial problems date back to the outbreak of the coronavirus pandemic and are considered to be the cause of the suicide of its financial director last September, the Venezuelan Gustavo Arnal, who threw himself into the street from the 18th floor of his Manhattan apartment. Economic difficulties reigned over all his businesses. Shortage of customers both in physical stores and in online sales, supply problems that made it difficult for him to replace some merchandise and, most seriously, not having been able to refinance his debt.

The CNBC explained last January that the company had been accumulating debt with different maturities -in 2024, 34 and 44- and had lost a large part of its liquidity, only partially covering those payments.

The origins

Bed Bath & Beyond was co-founded by Warren Eisenberg and Leonard Feinstein, who together opened two stores Bed ‘n Bath in 1971 in the suburbs of New York City. According to The Wall Street Journal, became a category killer: He had big box stores selling everything from bedding to air purifiers. He changed his name to Bed Bath & Beyond in 1987.

The founders spent what little money they had on merchandise and none on store aesthetics. To cover up industrial facilities, they piled merchandise up to the ceiling. “If you came to the store to buy a mattress topper, there was no way you would walk out with just a mattress topper,” Eisenberg, 92, said in an interview in January.

The company went public in 1992 and grew to more than 1,550 stores. Along the way, he acquired the chain Buybuy Baby Started by the Feinstein sons. He also bought Christmas Tree Shops, the Harmon drugstore chain and One Kings Lane, an online home decor retailer.

“We missed the train on the Internet”

Bed Bath & Beyond did not have an unprofitable year as a listed company until 2019, when it reported its first annual sales decline. By then, the rise of Amazon and other online retailers had begun to affect the business. “We missed the boat on the Internet,” Eisenberg said.

A group of activist investors forced the co-founders, who had stepped down from their executive roles in 2003 but remained co-chairs, to leave the board in 2019. The new leadership hired former Target executive Mark Tritton as chief executive. Tritton moved quickly to put his stamp on the company. He sold many of the company’s side businesses, including Christmas Tree Shops. Then, in January 2020, he signed an agreement to sell about half of the company’s real estate to a private equity firm and re-rent the spaces.

With the world locked in the middle of the covid pandemic, Tritton drove the company’s biggest change. He replaced well-known brands like KitchenAid mixers, All-Clad cookware and OXO spatulas with private-label products made just for Bed Bath & Beyond.

Tritton’s plan failed

That plan failed for a number of reasons, say former employees and analysts. Tritton made the switch at a time when the pandemic had upended supply chains. Factories had temporarily closed and shipping delays were rampant, along with rising costs, making it difficult for retailers to keep products flowing to their stores in a timely manner. The company also launched too many private labels too quickly, before it had the infrastructure to support them. It planned to launch eight new brands in 2021 alone.

At first, the results of Tritton’s strategy seemed promising. Bed Bath & Beyond sales increased 49% in the spring 2021 quarter, compared to a year earlier, when stores closed due to covid lockdown measures. The executive presented the results to the board that showed that some of the first launches of private labels, such as the Simply Essential line of bedding, bath, kitchen, dining and storage items, were well received by buyers.

Part of that purchase was due to consumers stocking up while shielding themselves from the pandemic. As that demand waned, the profits quickly evaporated. By August 2021, sales were falling and continued to decline as losses piled up.

Tritton had planned a similar overhaul of the Buybuy Baby chain by replacing Gerber and other children’s brands with private label products. But he was fired in June 2022, before he could make many of those changes. Sue Gove, a veteran retail executive and director of Bed Bath & Beyond, has been named interim CEO.

It seemed that things were going to change. Bed Bath & Beyond shares soared after Ryan Cohen, the billionaire founder of pet store Chewy, took a large stake in the company and called for changes, including the sale of Buybuy Baby.

The board considered strategic alternatives for the baby chain but ultimately decided not to sell because separating it would have been time consuming and expensive, and they needed to nail down a new strategy before marketing it to potential bidders, people familiar with the situation said.

Bed Bath & Beyond returned to the worst case scenario. He was running low on cash and had fallen behind on payments to vendors. Shares plunged in August after Cohen divested all of his stake.

The company announced plans to close 150 stores and reduce staff. Over Labor Day weekend, his finance chief committed suicide days after helping secure new financing. In October, Gove, who had been appointed permanent chief executive, organized a meeting to reassure suppliers and plead for their continued support, while trying to bring back big-name national brands.

By then, however, many vendors had found other places to sell their products. Bed Bath & Beyond had trouble keeping its stores stocked during the recent holiday shopping season.

In early January, the retailer caved in on the evidence, warning that it might not have enough cash to continue operating its business after holiday sales fell short.

In February, the company reached an agreement with hedge fund Hudson Bay Capital Management to raise $225 million up front and more in installments over 10 months while the retailer closed stores and cut costs. The company terminated the deal in April when its share price plummeted.

Instead, Bed Bath & Beyond said it would try to raise $300 million by April 26 through the sale of new shares, but the falling share price made that increasingly difficult.

Customers said they are saddened by the company’s demise, but have already found other places to shop. “They used to be my favorite place to buy bedding, appliances, everything I needed for the house,” says Sheryl Bilus, a 68-year-old retired bank manager who lives in Canton, Georgia. “Now, I buy all of that on Amazon.”