Bed Path & Beyond files for bankruptcy

New York (CNN) Bed Bath & Beyond, the 1990s and 2000s store for all your home goods, filed for bankruptcy on Sunday.

“Thank you to all of our loyal customers. We have made the difficult decision to cease our operations,” a statement on the company’s website said Sunday morning.

The company’s 360 Bed Bath & Beyond locations will remain open, as will its 120 buybuy BABY stores and websites. The company took out a $240 million loan to finance its operations during the bankruptcy.

But store closing sales begin Wednesday, and Bed Bath & Beyond will close some stores. How many — or what happens to its 14,000 employees — depends on what happens next.

A bankruptcy filing does not mean that a company goes out of business. Many large US companies have filed for bankruptcy, using it to reduce debt and other expenses they cannot pay. But even if Bed Bath and Beyond emerges from bankruptcy, its future is far from guaranteed.

The company said it would seek to sell some or all of its business. If it can find a buyer, Bed Bath & Beyond will stop closing stores. But if a buyer doesn’t come forward, Bed Bath & Beyond will liquidate entirely and go out of business.

It’s possible the company will emerge from bankruptcy as an online-only retailer, said Global Data retail analyst Neil Sanders.

“Ultimately, when it emerges from bankruptcy, Bed Bath & Beyond will be a shadow of its former self,” he said.

Bed Bath & Beyond was the crowning achievement of an era of so-called “category killers” — chains that dominated retail — like Toys “R” Us, Circuit City and Sports Authority. Those companies also eventually filed for bankruptcy as shoppers turned away from large specialty stores in favor of online options like Amazon.

Chris Hammons unloads a bag of merchandise at a Pet Bath & Beyond store in Dallas, Texas on September 23, 2009.

Bed Bath & Beyond is known for its floor-to-ceiling stacks of pots and pans, towels and bedding in its cavernous stores — and its ubiquitous 20% off coupons. The Blue and white coupons became a pop culture icon, and millions of Americans stashed them in their cars, closets, and basements.

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Customers will use their remaining 20% ​​off coupons on Sunday, Monday and Tuesday, the company said. The company will stop accepting them on Wednesday. Instead, Bed Bath & Beyond expects to offer “deep discounts” on its products as part of its going-out sales.

The retailer attracted a wide range of customers by selling name brands at discount prices. Brands wanted a spot on Bed Bath & Beyond’s shelves, knowing it would lead to big sales. Additionally, the open store layout encouraged impulse buying: Shoppers would come in to buy fresh foods and leave with pillows, towels and other items.

The stores were a staple for shoppers during the winter holidays and school and college seasons, and Bed Bath & Beyond also had a strong baby and wedding registry business.

But the New Jersey-based company has been slow to respond to shopping changes and has struggled to woo customers who have switched to Amazon, Target and other chains.

In its bankruptcy filing, Bed Bath & Beyond said it had $5.2 billion in debt and just $4.4 billion in assets. It secured $240 million in financing on Sunday, and it didn’t take long to close its stores and cease operations.

The company encouraged shoppers to look for its discounted items later this week. Items purchased before Wednesday can be returned until May 24, but all sales made after Wednesday are final. The store will stop accepting gift cards starting May 8.

Superstore period

Founded in 1971 by Warren Eisenberg and Leonard Feinstein, two veterans of the discount retail industry in Springfield, New Jersey, the chain of small linen and bath stores — then called Bed N Bath — originally sold designer bedding in the Northeast and California. , a new trend at the time. Unlike department stores, it does not rely on sales events to attract customers.

The company changed its name to Bed Bath & Beyond in 1987, reflecting its expanded products and larger “superstores.” The company went public in 1992 with 38 stores and sales of about $200 million.

“We saw the department store shakeout, and we knew that specialty stores were going to be the next wave of retail,” Feinstein said. said In 1993. “It was the beginning of a designer approach to linens and housewares, and we saw a real opportunity.”

Customers check out items in shopping carts at a Bed, Bath & Beyond store in New York City on January 18, 1994.

By 2000, those figures had grown to 241 stores and $1.1 billion in annual sales. The 1,000th Bed Bath & Beyond store opened in 2009, when the chain reached $7.8 billion in annual sales.

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The company is something of an iconoclast. It relied on print coupons distributed in weekly newspapers to attract customers.

“Why would we give a customer a discount on something you want — not something we want to sell? We’ll send a coupon and it’ll be cheaper,” Eisenberg said in a 2020 New York Times interview.

The chain was known for letting store managers decide which products to stock, customizing their individual stores, and shipping products directly to stores instead of a central warehouse.

The rise of online shopping

But as brick-and-mortar began to give way to e-commerce, Bed Bath & Beyond slowed the transition — a misstep given the fact that home decor is one of the most commonly purchased categories online.

“We missed the boat on the Internet,” Eisenberg said In a recent Wall Street Journal interview. (The co-founders are no longer associated with the company.)

Online shopping has weakened the appeal of Bed Bath & Beyond’s fan-favorite coupons, as customers can find plenty of cheaper alternatives on Amazon or browse a wider selection on sites like wayfarer (W).

However, Amazon and online shopping aren’t the only ones that Bed Bath & Beyond is inundated with.

Walmart (WMT), target (DGT) And Costco (cost) have grown over the past decade and have been able to attract customers to Bed Bath & Beyond with their low prices and wide range of merchandise. Discount chains like HomeGoods and TJ Maxx have also cut prices on Bed Bath & Beyond.

Without the distinction of lower prices or wider selection, Bed Bath & Beyond’s sales stagnated from 2012 to 2019.

Shoppers check out cleaning products while shopping inside a Bed Bath & Beyond store in New York on April 13, 2011.

Then the pandemic hit in 2020. The company temporarily closed all of its stores while competing with what it considers “essential retailers,” such as Walmart. Sales are down 17% in 2020 and 15% in 2021.

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What’s more, Bed Bath & Beyond has rotated through various executives and turnaround strategies in recent years.

Former Target executive Mark Tritton took the helm in 2019 with investor support and a bold new strategy. He withdrew coupons and merchandise from national brands in favor of Bed Bath & Beyond’s own private-label brands.

But the change alienated customers who had been loyal to big brands. The company fell behind on paying vendors, and stores didn’t have enough products to stock shelves. Tritton will step down as CEO in 2022.

Fight to avoid bankruptcy

Bed Bath & Beyond (PPPY)It has been teetering on the brink of bankruptcy for months.

In February, it managed to stave off bankruptcy by completing a complex stock offering that provided both immediate cash and a promise of more financing to pay down its debt in the future. The offering is backed by private equity group Hudson’s Bay Capital.

But Bed Bath & Beyond said last month terminated the contract He turned to the public market in a fundraising effort with Hudson’s Bay Capital for future financing.

The company is also shrinking to save money. Earlier this year it said it would closer Around 400 locations, but will keep profitable stores open in key markets.

And the company tried to save money Severance not paid For some of the laid-off workers in the process of closing down shops.

Bed Bath & Beyond laid off 1,295 workers in New Jersey this month, days before a new state law kicks in that will give workers who lose their jobs severance pay — the equivalent of one week’s pay each year.

However, all these moves were not enough to keep the once-dominant chain out of bankruptcy.

And Bed Bath & Beyond is the latest retail chain to file for bankruptcy this year. Bankruptcies are piling up in the retail industry as interest rates rise and discretionary spending declines.

David Bridal, Party City, Tuesday morning, mattress manufacturer Serta Simmons and pet store retailer Independent Pet Partners have all filed for bankruptcy in recent weeks.

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