The end of an era could be coming: Bed Bath & Beyond (BBBY), once one of America’s most popular home furnishings retailers, is reportedly planning to file for bankruptcy in the coming weeks.
From humble beginnings to a national retail giant selling everything from coffee makers to candy, the company’s 50-plus year journey has been both adventurous and chaotic.
Here’s a look at the years leading up to the current near-death state.
The good old days
Founders Leonard Feinstein and Warren Eisenberg originally worked at Arlans, a discount retail chain, but eventually discovered the need for niche stores that better served shoppers.
In 1971, they opened the first “Bed ‘n Bath” bedding-only store in Springfield, New Jersey. Their bet was spot on: The 1980s brought a surge in consumption, Walmart-driven price deflation, and a new retail economy that led to booming business in America’s suburbs for big retailers. The popularity helped Bed n’ Bath expand with more products out of its native state of New Jersey, and in 1987 it added the “Beyond” label to its company name.
Bed Bath & Beyond was the classic “category killer” of the 1980s and 1990s, much like the now-defunct Toys “R” Us. Category killers represented a new wave of superstores, characterized by high inventory levels and low prices in their specific category, e.g. B. Housewares. Customers have a wider selection of goods to browse than at smaller, more local businesses.
In its heyday, Bed Bath & Beyond prices were so low year-round that customer sales events were no longer calendar-worthy. It didn’t take a multimillion-dollar advertising campaign to entice shoppers—just the big blue coupons in the snail mail that customers are familiar with.
The company went public in June 1992, initially trading at around $1. Sales surpassed $1 billion in 1998. The company weathered recessions and kept sales buoyant as more homes were established across the United States.
The story goes on
Soon the paper coupons that Bed Bath & Beyond thrived on became obsolete as more and more Americans switched to online shopping in the early 2000s, allowing customers to compare prices with other stores and use coupons digitally. Bed Bath & Beyond came late to this internet boom fueled by competitors like Target (TGT) and Amazon (AMZN).
After the start of the new millennium, the company showed itself to be resistant to the constantly evolving new era of retail.
Steven Temares, who joined the firm as a real estate attorney in 1992, became CEO in 2003 and left that role in 2019. The founders of the company remained CEOs. And others on the board had little retail and technology experience. At the same time, online competitors’ profits have been hit, but that hasn’t stopped Bed Bath & Beyond from opening more stores with reckless abandon.
The peak
The good days for Bed Bath & Beyond were fast becoming the good old days. After hitting an all-time high of $70 per share in January 2014, the stock experienced volatility through March 2015, and the stock fell below $40 per share in the second half of 2016 on slacking sales.
In 2019, quarterly revenue growth year-over-year began to turn consistently negative. On October 9, 2019, the company named Mark Tritton, former head of merchandising at Target, as CEO. The stock rose 21% on the day on hopes of a major turnaround.
Tritton was recognized early on on Wall Street for his efforts to close underperforming stores, cut spending, revamp merchandise and redesign stores. And the company’s bottom line began to improve, raising hopes that Tritton would create a revolution in retail for the ages.
Then the COVID-19 pandemic hit and retail stores across the country were closed due to health concerns.
Higher e-commerce sales during the pandemic kept Bed Bath & Beyond afloat but still lagged behind peers like Target as the latter sold groceries. Meanwhile, online home furnishing retailers like Wayfair (W) were booming.
As the US economy reopened, Bed Bath & Beyond loyalists returned to stores only to find their favorite brands removed. In their place came an avalanche of Tritton trademarks aimed at boosting profits. The shops were also generally untidy, with all the old goods that Tritton no longer wanted to sell being heavily discounted.
The stock fell below $4 per share in April 2020 but skyrocketed in 2021 as COVID restrictions were lifted and new retailers crowded into various individual stocks, including $BBBY. Tritton laid out a post-pandemic bailout plan that would see underperforming stores shuttered and others restructured, while arguing that $BBBY is a momentum stock, not a meme stock.
“Customers can imagine themselves in their own homes instead of buying off the shelf and trying to work it out later,” Tritton told Yahoo Finance in a July 2021 interview. Touch and feel and just wander around and find things in the store, and that we really wanted to play.
However, additions to the shopping experience — including coffee shops, a new app, shop-and-scan, and more in-store customer experimentation — have failed to reverse the trend of increasingly slow sales.
‘We are in the last days
In March 2022, $BBBY’s stock showed renewed signs of life after activist investor and GameStop (GME) Chairman Ryan Cohen took a 9.8% stake in the company and presented the company with a roadmap to restore its credibility.
Editors at r/wallstreetbets hailed Cohen as “the meme king who will reign for 1,000 years,” and the stock surged as high as $27.23 before resuming its year-long downtrend. Later in 2022, Bed Bath & Beyond’s stock soared, resulting in a brief squeeze: On Aug. 16, the stock plummeted nearly 70%.
The receipts showed a different reality. In late June, Bed Bath & Beyond ousted Tritton to end its second quarter with just $107 million in cash after a quarterly loss of $224 million for adjusted operating income.
“We’re looking at a situation where this company probably won’t be there anymore,” Loop Capital managing director Anthony Chukumba told Yahoo Finance Live on June 29, 2022. “We could speak of months at this point. We are at the end of days. These results were a dumpster fire. There is no other way to express it.”
People walk out of a Bed Bath & Beyond store in the Manhattan borough of New York City, January 27, 2021. (Photo: Portal/Carlo Allegri)
In July 2022, the stock hit an all-time low on mounting losses and a bleak outlook.
A retail expert said the company’s liquidity was its “top concern”.
“Bed Bath & Beyond are in a world of pain because they have burned a tremendous amount of available cash, their business has no forward momentum and now, as we all know, there is a tremendous leadership void that they need to fill,” Mark Cohen , a professor of retail studies at Columbia University and former CEO of Sears Canada, told Yahoo Finance Live in July 2022.
Bed Bath & Beyond seemed unfazed by Wall Street’s concerns.
“We have a $1 billion revolving credit facility,” Bed Bath & Beyond spokesman Eric Mangan told Yahoo Finance at the time (Mangan left Bed Bath & Beyond in late 2022). “In addition, we have already taken action on many fronts — including reducing capital expenditures by at least $100 million from the company’s original plan.
Goodbye BBBY?
Locally, the stores were showing yawning signs of possible bankruptcy or a major restructuring.
When Yahoo Finance’s Brian Sozzi visited two Bed Bath & Beyond stores in August, he found a messy, untouched stack of sale and clearance products. There was overstocking of merchandise customers didn’t want and abandoned shelves for seasonally high-demand products like back-to-college items.
By September, the company announced its plan to close 150 stores. On October 26, 2022, board member Sue Gove became CEO.
“It was brave that they tried to enact a turnaround plan,” Macco CEO Drew McManigle told Yahoo Finance Live. “They came too late. It wasn’t deep enough or far enough. For example, they wanted to close 21% of their stores, which just isn’t enough.”
Allegations of a “pump and dump” scheme and a lawsuit filed by a shareholder accused Ryan Cohen and the company’s CFO of wrongdoing, further hurting the stock. Tragedy also struck the company with the death of CFO Gustavo Arnal in a suspected suicide in a New York City building.
By the end of 2022, Bed Bath & Beyond had accumulated more than $1 billion in debt and losses. They repaid $123 million in stock — and the stock continued to fall.
Bed Bath & Beyond shares closed at $1.30 on Jan. 6, the lowest since the early 1990s, when the company filed for potential bankruptcy after a brutal holiday season
“The Company continues to consider all strategic alternatives, including restructuring or refinancing its debt, seeking additional debt or equity, reducing or delaying the Company’s operations and strategic initiatives, or selling assets, other strategic transactions and/or others Measures, including obtaining relief under the U.S. bankruptcy law,” Bed Bath & Beyond said in a statement.
“These measures may not be successful.”
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Tanya is a data reporter for Yahoo Finance. Follow her on Twitter @tanjakaushal00.
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