How Bed Bath & Beyond lost the fight to stave off bankruptcy

Bed Bath & Beyond filed for Chapter 11 bankruptcy yesterday.

Bed Bath & Beyond, which has been trying to avoid bankruptcy for months, filed Chapter 11 proceedings on April 23.

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Bed Bath & Beyond, founded in 1971, was the first big-box retailer, selling everything from kitchen appliances to sheets and rugs. It peaked before Amazon entered the market. Bed Bath & Beyond struggled over the past decade to deal with its haphazard stock and a misaligned sales presence online. Bed Bath & Beyond's online strategy was not up to par with its competitors, and the pandemic made matters worse.

Since the beginning of the year the company has warned that bankruptcy was a possibility. They cite lower levels of customer traffic, reduced inventory availability and other business challenges.

Bed Bath & Beyond, cash-strapped, was in debt and made a series of desperate attempts to keep the company afloat. They tried everything from closing stores, hiring staff, to raising money on the public market, to even getting a vendor to pay for the merchandise. But nothing worked. Bed Bath & Beyond is now joining a list of ailing retail stores, including Party City and David's Bridal that filed for bankruptcy this year.

Bed Bath & Beyond filed motions in the New Jersey bankruptcy courts to auction off two of its brands, buybuy Baby and the Bed Bath & Beyond brand. The latter was acquired by Bed Bath & Beyond for $67m back in 2007. Ryan Cohen, chairman of GameStop, and a former activist shareholder in Bed Bath & Beyond suggested, in a letter dated March 20, 2022, that buybuy Baby is worth more than the entire market cap of its parent company and should be sold or spun off.

Harman Face Values will not be auctioned. This discount health and beauty retailer, which has been a Bed Bath & Beyond subsidiary since 2002, is a discount health & beauty retailer.

According to preliminary earnings, the drop in sales for the fourth quarter 2022 compared to last year is between 40-50%.

100: The number or cartons of inventory received by a Bed Bath & Beyond in the Midwest two to three times a weeks during the holiday season 2022. This is a drastic drop from 400 cartons received five times a weekly during the holiday season 2021.

Bed Bath & Beyond and buybuy Baby have 360 and 120 stores, respectively, that are currently open but will close over time. Bed Bath & Beyond had more than 970 US stores at its peak during the 2010s.

Bed Bath & Beyond raised $48.5 million as of 10 April by selling approximately 100,1 million shares. This is far less than the $300 million that the company hoped to raise through this share sale.

Sixth Street agreed to lend Bed Bath & Beyond $240 million in debtor-in possession financing to complete the bankruptcy process. Bed Bath & Beyond has said that it will continue to honor its obligations to vendors, employees, and customers.

Bed Bath & Beyond assets and liabilities as of November: $4.4 billion versus $5 billion.

Bed Bath & Beyond's $5.2 billion debt is owed to a total of 25,001-50,000 creditors.

14,000: This is the number of Bed Bath & Beyond employees whose jobs are likely to disappear, without any severance package.

"Millions have trusted us to help them through their most important life milestones, from getting married to going to college. From settling in a new house to having a child. Our teams have worked tirelessly to strengthen and support our beloved banners Bed Bath & Beyond, and buybuy BABY. We are grateful to our customers, associates, partners and communities that we serve. We will continue to do everything we can to make them happy. We will work diligently to maximize the value of our business for all stakeholders." --Sue Gove President & CEO, Bed Bath & Beyond

Mark Tritton is appointed CEO of the company after struggling to achieve quarterly revenue growth. Mark Tritton was previously the chief of merchandise at Target.

2020: The covid-19 epidemic will bring in-store retailing to a halt. Bed Bath & Beyond has seen its online sales soar, but they still lag behind competitors like Target.

In 2021, Bed Bath & Beyond will shift its focus from covid to private brands. However, these do not resonate with the customers. The stock continues to rise thanks to the meme-stock craze.

In March 2022, GameStop Chairman Ryan Cohen reveals that he has a stake in Bed Bath & Beyond of almost 10%.

Tritton fired in June 2022 after sales drop 25% during the first quarter. Sue Gove becomes the new CEO.

August 2022: The meme-stock mania returns temporarily, but only until Cohen announces his intention to sell all of his positions, which causes the stock to plummet. The company cuts a third off its private labels. A shareholder files a lawsuit against the company accusing CFO Gustavo Arnal and Cohen of conspiring in a pump-and dump scheme. Arnal commits suicide a few days later.

Bed Bath & Beyond will end 2022 with a debt of over $1 billion. In a regulatory filing made on Jan. 5, the retailer expressed "substantial doubts" about its "ability to continue." A second filing was made on Jan. 25. The retailer said it had defaulted on loans and that it is looking at alternatives for repayment, including restructuring its debt through bankruptcy court.

In February 2023, the company narrowly avoided bankruptcy by raising approximately $225 million through an equity offering. Hudson Bay Capital Management was the primary investor in this share sale. This infusion could be followed by another $800m in the next 10 months.

March 2023: After a steep drop in sales, the deal with Hudson Bay Capital ends. Bed Bath & Beyond turns to the public markets to raise funds. It warns it will "likely" file for bankruptcy if it does not raise enough money.

Bed Bath & Beyond will sign a contract with Hilco Global in April 2023. ReStore Capital, a Hilco subsidiary, agrees to purchase up to $120,000,000 in merchandise from Bed Bath & Beyond’s main suppliers. This comes after the relationship between Bed Bath & Beyond and its vendors soured due to their liquidity problems. On April 23, the company declares bankruptcy two weeks later. The store closing sales will begin on April 26. Returns, exchanges and using gift cards and merchandise credits are all spread over the next month. This information is available on the company's Chapter 11 FAQ.

Bed Bath & Beyond "strategically manages inventory to preserve value", as it is hopeful of finding a buyer. In the event that a sale is successful, Bed Bath & Beyond will not close any stores to complete the transaction. The company will be liquidated if there is no last-minute buyer.

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Bed Bath & Beyond failed to meet earnings expectations a few weeks after warning of possible bankruptcy.