A total of 10 shoppers meandered the vast and visibly sparse aisles of a Bed Bath & Beyond in Northern Virginia on a recent Sunday.
“Is it me or is it particularly cold in here?” one shopper asked another, pushing an empty cart past a wall of identical quilts. She scanned the bare cul-de-sac of home furnishings that showed a few mirrors and a worn wall shelf. A fluorescent light buzzed and flickered overhead.
Once an unstoppable retailer — considered a “category killer” for its triumph over many rivals — Bed Bath & Beyond has now filed for bankruptcy. It plans to begin closing its 360 Bed Bath & Beyond stores and 120 BuyBuy Baby stores. A vision of this chain’s survival is bleak.
“I remember thinking it feels like the last days of Sears in here,” Daniel Callahan of Louisville, Ky., said of a visit to the once-beloved Bed Bath & Beyond a few months ago. “I ended up buying something,” he said. Soon after, the store was actually closed.
Bed Bath & Beyond enters bankruptcy desperate and turbulent, after several misfired turnarounds, abrupt management upheavals, rise and crash like a meme stock, store closures, job cuts and many last-gasp financing deals. For several months, the chain has lost both money and buyers, struggling to replenish stock on the shelves as suppliers and banks have cut back.
During the chaos, the home goods giant has faced a fundamental question: In a world that shops online, teeming with competitors, where does it fit in?
A cultural icon is born
Launched in 1971 with two towel and linen stores in New Jersey, Bed Bath & Beyond grew even through the Great Recession. It outlasted its main rival Linens ‘n Things, later acquiring BuyBuy Baby, World Market and online retailer One Kings Lane. As recently as 2018, the chain had more than 1,500 stores.
Its big blue coupon for 20% off, ubiquitous and never expiring, became such a part of the American shopping fabric that even mobster Whitey Bulger kept one in his kitchen drawer. TV program Wide city built an entire subplot around it. (Bed Bath & Beyond will stop accepting coupons on April 26.)
The chain had also perfected a secret power play: Unlike most retailers, Bed Bath let local managers choose what to sell in their stores to satisfy the particular tastes of shoppers in their area.
“Floor to ceiling, stack them high and watch them fly — that was kind of our motto,” said Beth Grossfeld, who spent 13 years in the marketing department of Bed Bath & Beyond. “And the customers loved it. It was like a treasure hunt. You got what you wanted and 10 other things.”
A relentless search for identity begins
But over time, Bed Bath & Beyond faced a growing crew of rivals: Amazon, Target, Wayfair and West Elm. The company meandered in search of its niche.
“I would go into one meeting and it would be ‘we need to be … the destination for the home, more upscale, home decor, more furniture,'” Amy Laskin, a former director of Bed Bath & Beyond content marketing, told NPR.
“The next conversation would be ‘we have to be more competitive with Amazon. We have to be the destination with everything,'” she recalled. “The next thing you know, we were wearing diamond jewelry like Costco does.”
Bed Bath & Beyond seemed similarly indecisive about its online presence.
One of the founders later acknowledged it The Wall Street Journal that the chain “missed the boat on the internet”. It whipped up a staggering website, but as recently as 2019 it ran ads promoting “offline shopping” as its heart remained in stores, with stacks of cookware, walls of trash cans and piles of pillows.
“We really went through kind of one [identity] crisis of trying to compete with our ever-growing competitors,” said Grossfeld, who left Bed Bath & Beyond in 2019. “There were a lot of things we tried to be that we weren’t.”
Turnarounds fail to turn things around
That year, in 2019, a push from activist investors forced out the longtime CEO and the company’s founders who had been on the board.
The new CEO, Mark Tritton, came from Target with a big idea that had worked there: Bed Bath & Beyond would replace big brands with its own, more profitable private labels. The chain rushed to “clean up” stores and close 200 underperforming stores. In place of Ralph Lauren towels and Calphalon pans came new store brands such as Everhome and Nestwell.
The timing proved disastrous, coinciding with the pandemic supply chain. Just when stay-at-home shoppers wanted everything that Bed Bath & Beyond usually sells, top items like KitchenAid mixers disappeared from the shelves.
Soon, Tritton and other executives were out — but not before Bed Bath & Beyond spent $1 billion buying back its own stock. The move benefits shareholders, and companies sometimes do it when they believe their stock is undervalued.
This belief was also shared by supporters of activist investor Ryan Cohen of Chewy and GameStop fame. Cohen bought a stake in the company last year, and advocated the sale of BuyBuy Baby. His fans on Reddit and YouTube pumped up the stock. Then, just as suddenly, Cohen sold his entire stake.
A future unravels
For the quarter ending just after Black Friday 2022, the company’s losses increased by 42% and sales fell by a third. In the following quarter, sales fell further. Even Grossfeld, a devoted fan and former employee, struggled to shop at Bed Bath & Beyond.
“[I thought] I know the stores like the back of my hand and I couldn’t find anything I needed to style one bedroom for a photo shoot,” she said. “It was a very sad day.”
Bed Bath & Beyond scrambled to reverse the failed turnaround. Executive Sue Gove took the helm with a “back-to-basics” plan to replenish the big brands, but brand suppliers were now anxious about ever getting paid. So were Bed Bath’s lenders.
In January, the chain defaulted on some of its loans shortly after warning that it could go bankrupt. The company announced dozens of store closures and sought rent breaks. For months, it drained many financial lifelines from banks and investors. Some landlords were reported to be readying new tenants. The stock price fell below $1, then below 50 cents.
Bed Bath & Beyond “is at a point where they can’t really invest in anything to turn their fortunes around. But even when the company had the funds to invest in turning its fortunes around, they didn’t show the ability to do it,” said David Silverman, which tracks retail at Fitch Ratings.
He pondered one big question that Bed Bath & Beyond raised in its Sunday filing: Can the company sell itself in bankruptcy? Then he answered it with another, even bigger one: Given all its existential setbacks, what is this business really worth?