Bed Bath & Beyond files for bankruptcy

New York (CNN) Bed Bath & Beyond, the store that seemed to be everything your home had during the ’90s and 2000s, filed for bankruptcy on Sunday. The company said it would sell its merchandise and then go out of business.

“Thank you to all of our loyal customers. We have made the difficult decision to begin winding down our operations,” a permit At the top of the company’s website said Sunday morning.

The company’s 360 Bed Bath & Beyond locations, along with the company’s 120 buybuy BABY stores, will remain open for the time being, as will their websites. But store closing sales will begin on Wednesday, and the company will liquidate all of its inventory.

“Millions of customers have trusted us with the most important milestones in their lives — from going to college to getting married, settling into a new home to having a baby,” Sue Goff, CEO of Bed Bath & Beyond, said in a statement. “We deeply value our associates, customers, partners, and the communities we serve, and remain steadfastly determined to serve them throughout this process.”

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

Chris Hammons unpacks a bag of items she purchased at the Bed Bath & Beyond store in Dallas, Texas on September 23, 2009.

Bed Bath & Beyond has become known for the pots and pans, towels, and bedding stacked floor-to-ceiling in its cavernous shops—and for its ubiquitous coupons for 20% off. the Blue and white coupons It became something of a pop culture icon, and millions of Americans ended up hiding them in their cars, closets, and basements.

The company said customers will have Sundays, Mondays and Tuesdays to use up the remaining 20% ​​off coupons. The company will stop accepting them on Wednesday. Instead, Bed Bath & Beyond expects to offer “significant discounts” on its products as part of its discontinued sales.

The retailer has attracted a wide range of customers by selling name brands at discount prices. The brands wanted a spot on Bed Bath & Beyond shelves, knowing it would lead to big sales. In addition, the store’s open plan design encouraged impulse buying: shoppers would come in for new dishes and come out with pillows, towels, and other items.

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

But the New Jersey-based company has been slow to respond to shopping changes and is struggling to entice customers who have moved to Amazon, Target and other chains.

In its bankruptcy filing, Bed Bath & Beyond said it had $5.2 billion in debt and assets worth only $4.4 billion. It secured $240 million in financing on Sunday to stay afloat long enough to close its stores and wind down operations.

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

Superstore era

Founded in 1971 by Warren Eisenberg and Leonard Feinstein, veterans of the discount retail industry in Springfield, New Jersey, the chain of small bath and linen stores—then called Bed ‘n Bath—grew first around the Northeast and in California selling Designer bedding, which was a new trend at the time. Unlike department stores, it did not rely on sales events to attract customers.

The company changed its name to Bed Bath & Beyond in 1987 to reflect expanded merchandise and larger “department stores”. The company went public in 1992 with 38 stores and about $200 million in sales.

“We saw the department store change and we knew specialty stores were going to be the next wave of retail.” He said in 1993. “It was the beginning of the designer’s take on linens and housewares and we saw a real opportunity.”

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

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

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The company was somewhat of an iconoclast. It spent little on advertising, relying instead on printed coupons distributed in weeklies to attract customers.

“Why don’t you just tell the customer we’ll give you a discount on the item you want—not the thing we want to put on sale? We’ll mail a coupon, and it’ll be a lot cheaper,” Eisenberg said in a 2020 interview with The New York Times.

The chain has been known for giving autonomy to store managers to decide which products to stock, allowing them to customize their individual stores, and shipping products directly to stores rather than to a central warehouse.

The rise of online shopping

But as brick-and-mortar has begun to give way to e-commerce, Bed Bath & Beyond has been slow to make the transition—a misstep compounded by the fact that home decor is one of the most popular categories bought online.

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

Online shopping has dampened the appeal of preferred Bed Bath & Beyond coupons, too, because consumers can find plenty of cheaper alternatives on Amazon or browse a wider selection on sites like Wayfair (w).

However, it wasn’t Amazon and online shopping that swamped Bed Bath & Beyond.

Walmart (wmt)And Goal (TGT) And Costco (it costs) They’ve grown over the past decade, and have been able to attract Bed Bath & Beyond customers with low prices and a wider selection of merchandise. Discount chains like HomeGoods and TJ Maxx have also slashed Bed Bath & Beyond prices.

Without the tradeoff between the lowest prices or the widest selection, Bed Bath & Beyond sales stagnated from 2012 to 2019.

Shoppers check cleaning supplies while shopping inside the 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 competitors deemed “essential retailers” like Wal-Mart remained open. Sales fell 17% in 2020 and 15% in 2021.

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Furthermore, Bed Bath & Beyond has rotated through several different CEOs and turnaround strategies in recent years.

Former Target CEO Mark Tritton took the helm of the company in 2019 with investor backing and a bold new strategy. He trimmed coupons and inventory from national brands in favor of Bed Bath & Beyond’s own brands.

But this change alienated customers who were loyal to the big brands. The company also defaulted on payments to vendors, and stores did not have enough merchandise to stock shelves. Triton will step down as CEO in 2022.

Scramble to avoid bankruptcy

bed bath behind (BBBY)He has been teetering on the brink of bankruptcy for months.

In February, she managed to stave off bankruptcy by completing a complex stock offering that gave her an immediate boost of cash and a pledge of more financing in the future to pay off her debts. The bid was backed by private equity group Hudson Bay Capital.

But Bed Bath & Beyond said it last month He closed the deal with Hudson Bay Capital for future financing and was going to the public market to try and raise money.

The company is also shrinking to save money. She said earlier this year that she would Close About 400 locations, but will keep profitable stores open in key markets.

And the company tried to save money with it Non-payment of end of service benefits For some laid-off workers when stores close.

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

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

And Bed Bath & Beyond is the latest retail chain to file for bankruptcy this year. Retail bankruptcies are piling up as interest rates rise and discretionary spending slows.

David’s Bridal, Party City, Tuesday Morning, mattress manufacturer Serta Simmons, and Independent Pet Partners, a pet retailer, have filed for bankruptcy in recent weeks.

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