Bed Bath & Beyond emerges as a winner from the 2008 recession. Sharper Image or Linens and Things But Bed Bath & Beyond actually expanded its business by acquiring other retailers. A home goods store full of towels and kitchen supplies, with big blue coupons offering discounts, kept shoppers in check.
Bed Bath & Beyond is no longer at the top as the US economy is now experiencing another period of uncertainty. This is because corporate structures are becoming increasingly unwieldy and fail to fully take into account the rise of online shopping.
On Sunday, the 52-year-old retailer has filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of New Jersey and said it would go through a “limited” process to sell some or all of its business. The company’s 360 Bed Bath & Beyond stores and 120 Buy Buy Baby stores and his website will continue to operate.
Bed Bath & Beyond has raised $240 million from investment firm Sixth Street Specialty Lending to finance its bankrupt business.
The company’s decline offers a glimpse into the forces shaping the post-pandemic retail industry. Companies like Bed Bath & Beyond had their financial problems masked as consumers rushed to spend stimulus money in their bank accounts, but economic concerns over the past few months have forced these weaknesses are exposed. As shoppers cut back on discretionary spending, it becomes even more important for retailers to adapt.
“You will see Darwinism in retail,” said Michael Lasser, a UBS retail analyst who has covered Bedbath & Beyond for 16 years. “2023 will be characterized in part by seeing Darwinism unfold after this period where it would have paused.”
The past few years have been tumultuous years for retailers. In 2020, early in the pandemic, JC Penney, Neiman Marcus, and J. Crew all filed for bankruptcy. Over the past two years, however, retailers have benefited from the willingness of US consumers to spend. In an environment where shoppers are now more cautious about what and where they buy, more businesses are at risk.
When Bed Bath & Beyond started in 1971 as a way to compete with the home goods division of department stores, the retail landscape was very different. The company’s founders, Warren Eisenberg and Leonard Feinstein, opened the chain’s first stores in New York and New Jersey. The business was originally called Bed N’ Bath.
Compared to stores like Macy’s, the startup promised a better selection of bed sheets, towels, shower curtains and other home goods. , the retailer was renamed Bed Bath & Beyond in 1987. It went public in 1992.
Retailers have embraced innovation, former executives and employees said. Instead of TV advertising, Bed Bath & Beyond relied on word-of-mouth advertising and massive coupons delivered to the mailboxes of millions of Americans. Countless shoppers keep his 20% off card in their car or junk drawer as a reminder to head to Bed Bath & Beyond if they’re considering, say, a new toaster.
Bed Bath & Beyond also employed a decentralized warehouse strategy, giving store managers more flexibility to order the items that most appealed to shoppers at their location.
It was also quick to use integrated digital technology in stores: instructional videos played in front of product displays, such as SodaStreams and juicers, so shoppers knew how they could be used at home. can. The website was established in 1999.
In 2000, Bed Bath & Beyond had 311 stores. 10 years later it had 1,100From 2002 to 2012, the company acquired Harmon Stores, Christmas Tree Shops, Buy Buy Baby and Cost Plus World Market. While the brand has helped diversify the company from a retail perspective, the move has diverted management’s focus away from other key investments, such as its e-commerce business. The company before retiring in 2015.
“We didn’t put much effort into the organic business of Bed Bath & Beyond and developing that business into consumer behavior,” says McMahon. “The internet started to become a reality, and in the process, consumer behavior changed.”
Competitors such as Amazon, Target, and Walmart invested in improving the online experience for shoppers, and Bed Bath & Beyond’s market share declined. Google searches were also counterproductive as the 20% discount was not taken into account online. This has led shoppers to believe that retailers such as Amazon offer better deals.
“In retrospect, there would have been opportunities where we could have invested more in evolving our core business than in these other acquisitions,” McMahon said.
In 2014, Bed Bath & Beyond first entered the fixed income market with the sale of $1.5 billion in bonds. buy back stockMany retailers avoid taking on debt, fully aware that industry volatility can quickly turn reasonable debt into a serious financial burden. UBS analyst Lasser said the move “A breakthrough event‘ And I thought it was an attempt to raise the company’s stock price to fend off activist investors.
If it was meant to be, it wasn’t a long-term solution. 12 new board members and the CEO they eventually endorse (Target’s Mark Tritton, the first CEO to come from outside the company.
Much of the work culture at Bed Bath & Beyond quickly changed. There were also layoffs. The store manager didn’t have much say in what items were stocked in the store. Tritton, who left the company last year, declined to comment on his tenure.
When the pandemic hit, Bed Bath & Beyond joined other retailers in addressing supply chain issues. But the company’s decentralized system made things more complicated, and its e-commerce technology was less advanced than many of its biggest competitors.
2020 revenue declined to $2.6 billion, down 16% from 2019. A once manageable debt burden quickly became unsustainable as businesses collapsed.
When the company was looking for a place to cut costs, it started ruining what people loved at Bed Bath & Beyond. In 2020, retailers said they would scale back mailings of trademarked coupons. We decided to move away from the domestic big names and create our own brand batches, which are usually more profitable for retailers. To make the store feel more open, items were removed and a 14-foot tall tower of towels was demolished.
“Bed Bath & Beyond was almost becoming a manual for how to be an adult,” said Chris Dancy, 54, at age 54.
He used to go to their store every week, but after the coupon was reduced, so were his visits.
“The allure of having a Willy Wonka golden ticket, or blue ticket, is gone,” he said.
In August, the company announced an aggressive restructuring plan, saying it would close 150 stores and lay off many more employees.Tritton is interim chief executive after he resigned in June. Gove said he is personally calling vendors to ensure Bed Bath & Beyond pays what it owes.
The retailer was thrown into emotional turmoil when Chief Financial Officer Gustavo Arnal passed away just days after the restructuring announcement. Arnall’s death was ruled a suicide, according to the New York City Coroner’s Office.
Bed Bath & Beyond’s suppliers began to get upset and demand an advance payment. Gove, who took over as CEO in October, said this has pushed inventory levels to about 70% over the past holiday season.
In early February, the company avoided bankruptcy after coming up with a plan to raise more than $1 billion using a public offering. The plan, backed by Hudson Bay Capital Management, would only work if Bedbath & Beyond’s share price was above $1 a share for him. This month, Bed Bath & Beyond canceled the transaction for violating its terms. The company’s shares Friday closed at 29 cents a share.
All the while, sales continued to decline and the company lost the cash and confidence its suppliers needed to keep shipping to stores.
“It’s a death spiral,” said Neil Saunders, GlobalData’s managing director of retail. “If you can’t secure inventory, you can’t sell. If you don’t sell, you lose credibility. It seems impossible.”
