Bed Bath & Beyond, the pioneering homewares retailer, appears to be heading for bankruptcy. But you wouldn’t necessarily know it if you visit its flagship store in the Chelsea neighborhood of New York — or if you look at its stock price this week.
Bed Bath & Beyond was among so-called “meme stocks” over the past year, including Gamestop, a struggling video games retailer, and cinema chain AMC, whose share prices have been skyrocketed by a new breed of online retailers.
BB&B fumed again this week, with its stock price more than doubling over the week amid speculation on online stock forums, including Reddit, that it could be a potential takeover target.
The company’s Chelsea store appears to be doing better than most, as it’s busy with shoppers browsing the aisles but many items are heavily discounted.
Still, some buyers were unsure about the company’s future. “It’s a great store, but other locations have almost no product on the shelves,” said Chintan Patel.
He said he’s been with Bed Bath & Beyond through their existential crisis. “It was 100 percent pump-and-dump, engineered by management,” Patel said. Another buyer said the company “kind of screwed itself.”
In fact, it seems unlikely that Chelsea’s buyers or meme stock traders can bail out Bed Bath & Beyond right now.
The company said last week it could file for Chapter 11 bankruptcy within weeks and doubts it can stay in business after a quarter of deep losses and sluggish sales that caused its shares to fall more than 30% fell. Even this week’s rally — which took its shares to nearly $5 — sends the stock price down 68% over the year.
On Tuesday, the company reported losses of nearly $400 million. More than 40% of the retailer’s products were sold out in October, double the number in the first half of the year as suppliers churn.
“A third of the revenue is gone, plunging an already ailing company into the depths of chaos,” said Neil Saunders, managing director of GlobalData.
However, the story of Bed Bath & Beyond is a strange tale of the power and destruction of the internet. While Wall Street analysts believed Amazon, Walmart and others would eat up the retailer’s business, shares of the company rose on a wave of enthusiasm last year after billionaire Ryan Cohen, founder of online pet food company Chewy, announced more than bought 7 million shares of the company.
Online investors who followed the r/wallstreetbets forum on Reddit crowned Cohen the “meme king who will reign for 1,000 years” and chimed in.
Whether investors actually thought of Bed Bath & Beyond as a solid deal, or just saw an opportunity to boost the price and then sell it, is an open question.
Other headline meme stocks that online traders used to punish hedge funds and other investors who bet against them have also plummeted. GameStop’s stock is down 70% since January 2022, and AMC’s stock is down 82% over the same period.
The party ended last August when Cohen announced plans to sell his 9.8% stake in the company, which netted him $178 million and sparked a sell-off among meme stock followers and allegations of a pump-and-dump program triggered. A month later, former Bed Bath & Beyond CFO Gustavo Arnal died after jumping from a luxury Manhattan skyscraper.
By then, the retailer’s stock had lost more than 70% of its value over the year, and the company said it was looking to turn things around with a strong holiday season.
However, attempts to streamline the product line have been complicated by pandemic shortages, a lack of online investment, and frustrated consumers who have abruptly returned to in-person shopping only to find a lack of choice.
Unlike many retailers, Bed Bath & Beyond wasn’t typical of retailers that collapsed under competition from online retailers like Amazon. At its peak in 2013, BB&B was valued at $17 billion. A company that hadn’t added debt to its balance sheet for two decades took on $1.5 billion in debt as buyers went online.
In August, the company took on more debt after buyers stayed away in the wake of the pandemic. As of this week, the retailer is valued at nearly $550 million.
“Multiple avenues are being explored and we are thoroughly and timely determining our next steps,” Chief Executive Susan Gove, who launched a turnaround plan four months ago, said in a statement.
But if or when Bed Bath & Beyond files for bankruptcy protection, many will regret its demise. The chain was founded in 1971 by Leonard Feinstein and Warren Eisenberg, who opened their first store in Springfield, New Jersey as Bed n’ Bath. In 1987, as big box store fashion exploded, Bed n’ Bath expanded across the state, adding more products to its name and the “Beyond” label, and becoming a classic category killer. It went public in 1992 and surpassed $1 billion in sales six years later.
As shoppers scoured the aisles on Tuesday, many speculated their shopping days at the store were numbered. Standing on Sixth Avenue, Michael Fekete said he didn’t buy into Bed Bath & Beyond’s 2021 stock surge and he wouldn’t buy it now.
“I don’t think the market will necessarily allow these megastores to continue,” he said. “I guess they only go online. We have seen many other department store retailers follow this path.”