Struggling Bed Bath & Beyond Files For Bankruptcy Protection; expects to close all stores by June – Chicago Tribune

NEW YORK — Bed Bath & Beyond — one of the original big-box retailers known for its seemingly endless offerings of linens, towels and cookware — filed for bankruptcy protection, after years of dismal sales and losses and numerous failed treatment plans.

The beleaguered home goods chain made the filing Sunday in US District Court in New Jersey, saying it will begin an orderly liquidation of the business while it seeks a buyer for all or some of its businesses. In the bankruptcy filing, the retailer said it expects to close all of its stores by June 30.

For now, the company’s 360 Bed Bath & Beyond stores and its 120 Buy Buy Baby sites and websites will remain open to serve customers.

It listed estimated assets and liabilities in the range of $1 billion to $10 billion. The move comes after the company was unable to secure funds to stay afloat.

In a statement, the company, based in Union, New Jersey, said it voluntarily filed the application “to effect an orderly liquidation of the business while conducting a limited marketing process to solicit interest in one or more sales of some or all of its assets .”

The store closures will put thousands of jobs at risk. The company employed 14,000 workers, according to the court document. That is drastically down from 32,000 in February 2022.

Bed Bath & Beyond said it secured a commitment of about $240 million in financing from Sixth Street Specialty Lending, Inc. to allow it to continue operating during the bankruptcy process.

“It’s the death of an icon. A lot of people have grown up with it,” said Neil Saunders, CEO of GlobalData Retail. “It’s an institution in retail, but unfortunately being an institution doesn’t protect you from financial problems.”

Founded in 1971, Bed Bath & Beyond had for years enjoyed its status as a big box retailer that offered a wide variety of bedding, towels and gadgets unmatched by department store rivals. It was among the first to introduce customers to many of today’s household items like the air fryer or the disposable coffee maker, and its 15% to 20% coupons were ubiquitous.

But over the past decade, Bed Bath & Beyond has struggled with weak sales, largely due to its cluttered assortment and lagging online strategy that made it difficult to compete with the likes of Target and Walmart, both of which have spruced up their home departments. with higher quality bedding and linens. Meanwhile, online players like Wayfair have lured customers with affordable and trendy furniture and home decor.

In late 2019, Bed Bath & Beyond reached out to Target CEO Mark Tritton to take the helm and turn around sales. Tritton quickly reduced coupons and began introducing store brands at the expense of national labels, a strategy that proved disastrous for the retailer.

And the pandemic, which occurred shortly after his arrival, forced the retailer to temporarily close its stores. It was never able to use the health crisis to pivot to a successful online strategy as others had, analysts said. And while many retailers struggled with supply chain issues a year ago, Bed Bath was among the most vulnerable, missing many of its 200 best-selling items, including kitchen appliances and personal electronics, in time for the 2021 holiday season.

The retailer ousted Tritton in June 2022 after two back-to-back quarters of disastrous sales. In recent months, the company, under the leadership of newly appointed president and CEO Sue Grove, has returned to its original strategy of focusing on national brands, rather than pushing its own store brands. But the company has had a hard time getting suppliers to commit to supplying goods because of the retailer’s financial problems.

This past holiday season, stores were short of many key items and lost many customers, a problem that continued to plague the retailer throughout the winter and spring seasons.

The bankruptcy filing comes as the company’s shares have fallen even further as speculation about an imminent bankruptcy filing increased. Its financial performance has also deteriorated. In late March, it noted that preliminary results showed anywhere from 40% to 50% declines in sales at stores open at least a year for the quarter ended Feb. 25.

The company also said in a Securities and Exchange Commission filing in late March that it planned to sell $300 million worth of stock to avoid bankruptcy.

The home goods retailer had issued several warnings about a potential bankruptcy filing since early this year. In late January, it noted in a government filing that it was in default on its loans and did not have the funds to repay what it owed. The company had said that the default forces the company to look at various options, including restructuring the debt in bankruptcy court.

Bed Bath & Beyond joins a growing list of retailers that have filed for bankruptcy so far this year, including party supplies chain Party City and David’s Bridal. The bankruptcy could offer a window into what’s to come in retail, given the changing landscape and growing challenges in the U.S. economy.

During the depths of the pandemic, a number of retailers filed for Chapter 11 bankruptcy, including Neiman Marcus and JC Penney. But in 2022, there was a respite in retail bankruptcy filings as shoppers, flush with government stimulus money and a pile of savings, spent with abandon, helped lift retailers of all kinds. But as credit tightens and inflation remains stubborn, shoppers have tightened their purse strings in recent months, leaving struggling retailers like Bed Bath & Beyond more vulnerable.

Bed Bath & Beyond had been trying to turn around the business and cut costs after the previous management’s new strategies exacerbated a sales slump. The company announced last August that it would close around 150 of its namesake stores and cut its workforce by 20%. It also provided more than $500 million in new funding.

Bed Bath & Beyond’s shares, which were trading at distressed levels, have also been on a turbulent run. It made a monstrous run from $5.77 to $23.08 in a little more than two weeks in August. The trade was reminiscent of last year’s meme-stock craze, when out-of-favor companies suddenly became the darlings of investors with smaller pockets.

But the stock fell back to earth after Ryan Cohen, the billionaire co-founder of online pet products retailer Chewy Inc. who bought a nearly 10% stake in Bed Bath & Beyond last March, sold all his shares.

The shares have hovered close to 30 cents in recent days. A year ago, the shares traded for around $17.

Bed Bath & Beyond said it expects to process returns and exchanges in accordance with its normal policies until May 24 for items purchased before Sunday. It also expects gift cards, gift cards and loyalty cards to be accepted through May 8. It will stop accepting coupons on Wednesday.

AP writer Bruce Shipkowski in Toms River, New Jersey, contributed to this report.