Bed Bath & Beyond, the popular home goods retailer, has filed for Chapter 11 bankruptcy protection after struggling to raise enough funds to keep the company afloat. The announcement comes after the company had been warning of a potential bankruptcy since early January due to a dismal holiday season and liquidity issues.
Despite the bankruptcy filing, the company’s 360 Bed Bath & Beyond stores and 120 Buybuy Baby locations will remain open for the time being. However, Bed Bath & Beyond plans to close the business and liquidate assets, and has filed motions in New Jersey bankruptcy court to auction off its brands.
Bed Bath & Beyond owes $5.2 billion in debt and has $4.4 billion in assets, with its biggest creditor being BNY Mellon at $1.18 billion. Sixth Street has agreed to lend Bed Bath $240 million in debtor-in-possession financing so it can continue to operate during the bankruptcy process.
The company plans to continue to pay employees wages and benefits and maintain customer programs. It has also appointed Holly Etlin, a retail turnaround expert, as its chief financial officer and chief restructuring officer.
Bed Bath’s stock is down about 88% this year, with shares closing at 29 cents on Friday, giving it a market value of $136.9 million. The company struggled to maintain relationships with its vendors and experienced low inventory levels, lagging sales, and dwindling cash reserves.
Bed Bath & Beyond has been in a state of upheaval in recent years, including the suicide of its finance chief Gustavo Arnal and activist investor Ryan Cohen’s brief involvement. The company was also unable to make its interest payments using funding gained from a stock offering and defaulted on its credit line with JPMorgan.
Bed Bath & Beyond is one of several “category killers” that have filed for bankruptcy due to competition from online retailers and changing consumer preferences. The company was slow to make the transition to e-commerce and missed the boat on the internet. Its iconic 20%-off coupons lost their allure as consumers turned to cheaper options on Amazon and other sites. Walmart, Target, Costco, and discount chains such as HomeGoods and TJ Maxx have also drawn Bed Bath customers with lower prices and wider selections.
The company was founded in 1971 by Warren Eisenberg and Leonard Feinstein and went public in 1992 with 38 stores and around $200 million in sales. Mark Tritton was appointed CEO in 2019 and launched an aggressive strategy change that failed to resonate with customers. Tritton’s turnaround efforts were called “poorly executed” and out of alignment with what shoppers wanted. CEO Sue Gove launched her own ambitious turnaround plan but struggled to repair relationships with key vendors and faced challenges from rising interest rates and inflation.
