BedBath&Beyond files for bankruptcy protection, a home furnishing giant abandoned by the times

It is learned that on April 24, the US home furnishings retail giant Bed Bath & Beyond filed for bankruptcy protection and will close all offline stores by June 30. Although filing for bankruptcy protection does not mean a complete closure, this 52-year-old home furnishing giant has reached the point of being eliminated.

It is reported that starting from April 26, Bed Bath & Beyond will begin to close its 360 Bed Bath & Beyond stores and 120 Buy Buy Baby stores in the United States and seek to sell some businesses. Items purchased before this can be returned before May 24, and stores will stop accepting gift cards on May 8.

During the global financial crisis in 2008, BedBath & Beyond expanded its business by acquiring other retailers, growing against the trend when many competitors filed for bankruptcy. In recent years, with the same global economic slowdown, BedBath & Beyond has begun to decline, which is caused by its rigid organizational structure and failure to keep up with the general trend of e-commerce transformation.

Why did it fall from grace after once dominating the offline home furnishing retail industry?

Bed'nBath was founded in the United States in 1971. Unlike department stores, Bed'nBath focuses on offline sales of home and bathroom products. In 1987, the company changed its name to BedBath & Beyond and expanded its product line. In 1992, BedBath & Beyond went public and had 38 stores in the United States with sales of approximately US$200 million.

In 1993, American department stores were undergoing a reshuffle, and retail chains focusing on a certain category became a new retail wave. BedBath&Beyond was one of the most dazzling stores of this era.

By 2000, BedBath&Beyond had 241 offline stores and annual sales of $1.1 billion. In 2009, the number of BedBath&Beyond's offline stores exceeded 1,000 for the first time, with annual sales of $7.8 billion.

At that time, Bed Bath & Beyond did not run TV ads, and relied mainly on printed coupons distributed in weekly magazines to attract customers, and large coupons sent to the mailboxes of millions of Americans. The 20% discount coupon became the symbol of Bed Bath & Beyond.

Bed Bath & Beyond also adopts a decentralized warehouse strategy, giving store managers autonomy to decide which products to stock and shipping products directly to stores rather than a central warehouse, which gives store managers more flexibility to order the merchandise that will most appeal to local shoppers.

However, as e-commerce became a new wave of retail, BedBath&Beyond lagged behind its competitors in the progress of its e-commerce business, especially as household products became one of the most purchased online categories, and BedBath&Beyond began to decline.

With the trend of e-commerce shopping, American consumers have found a large number of cheaper household items on Amazon, and the rise of vertical shopping websites such as Wayfair has provided more product choices. The 20% coupon, which is BedBath & Beyond's trump card, has become less attractive.

It wasn't just online shopping that put BedBath & Beyond out of business. In the U.S. offline home furnishing retail market, Walmart, Target and Costco have grown over the past decade, attracting BedBath & Beyond customers with lower prices and a wider range of merchandise. Discount chains such as HomeGoods and TJMaxx have also reduced BedBath & Beyond's price advantage.

Due to the failure to find its own differentiated advantages, BedBath&Beyond's sales began to stagnate from 2012 to 2019.

When the epidemic broke out in 2020, BedBath & Beyond temporarily closed all its stores, while competitors such as Walmart, which were considered "essential retailers," remained open and lost market share. That year, BedBath & Beyond's sales fell 17% and fell 15% in 2021.

In addition, in recent years, BedBath & Beyond has rotated several different executives and turnover strategies in recent years, reducing coupons and inventory of national brands and turning to the development of BedBath & Beyond's own brands.

The change alienated loyal Bed Bath & Beyond customers, and the brand fell behind on payments to suppliers, leaving stores without enough merchandise to stock their shelves.

Reorganization plan failed, BedBath&Beyond is on the verge of bankruptcy

Bed Bath & Beyond has been teetering on the brink of bankruptcy since early January and issued a bankruptcy warning, saying it might not have the cash to cover expenses after a dismal holiday season.

As of Friday's close, BedBath & Beyond shares were trading at 29 cents, down about 88% this year, with a market value of $136.9 million. In April last year, BedBath & Beyond was trading at about $20 per share.

Bed Bath & Beyond avoided bankruptcy in February with a stock offering that gave it some cash and the promise of more money in the future to pay down debt, with the offering backed by private equity group Hudson Bay Capital.

But in March, Bed Bath & Beyond said it terminated its future financing deal with Hudson Bay Capital and turned to the public markets to raise money.

In addition, BedBath & Beyond has also been downsizing to save money. Earlier this year, BedBath & Beyond announced that it would close about 400 stores, but would continue to open profitable stores in major markets.

However, all of these moves were not enough to save Bed Bath & Beyond from bankruptcy.

Bed Bath & Beyond had about $4.4 billion in assets and $5.2 billion in debt as of the end of November, according to court documents. It owes the most at $1.18 billion to Bank of New York Mellon, in addition to a long list of creditors that includes suppliers such as Pinterest, Keurig and Blue Yonder, the documents show. The company has a total of 25,001 to 50,000 creditors and employs about 14,000 non-seasonal workers, according to court documents.

However, filing for bankruptcy protection does not mean going out of business. BedBath & Beyond is seeking to sell part or all of its business. If a buyer can be found, BedBath & Beyond will stop closing stores. But if no buyer is available, BedBath & Beyond will face complete liquidation and closure.

Bed Bath & Beyond is the latest retail chain to file for bankruptcy this year. Bankruptcies are increasing in the retail sector as interest rates rise and discretionary spending slows. David's Bridal, Party City, Tuesday Morning, mattress maker Serta Simmons and pet store retailer Independent Pet Partners have filed for bankruptcy in recent weeks.

Editor✎ Ashley/

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