Retail Chain Bed Bath & Beyond Files For Bankruptcy Protection
Bed Bath & Beyond (NASDAQ: BBBY), a flailing home goods retail chain, has gone under. The company has voluntarily filed…
Bed Bath & Beyond (NASDAQ: BBBY), a flailing home goods retail chain, has gone under. The company has voluntarily filed for Chapter 11 bankruptcy protection in a U.S. court and plans to liquidate all its assets and shut down.
Bed Bath & Beyond’s 360 namesake stores and 120 Buybuy Baby stores will remain open in the meantime as it liquidates assets. But the company filed motions in bankruptcy court seeking permission to auction the two brands.
- As of November 2022, Bed Bath had $4.4bn in assets and liabilities of $5.2bn. The company has been struggling in recent years amid the broader shift towards e-commerce, which it failed to capitalize on; it hasn’t posted a net profit since 2019.
- Despite its struggles, Bed Bath became a “meme stock” early this year, referring to stocks that become viral among retail investors with little attention to business fundamentals. Bed Bath tried to capitalize on that hype by selling over $1bn in new shares but raised only $360mn due to low demand. It initiated another $300mn stock offering this March but had raised only $49mn by April.
- Bed Bath warned in filings that it was likely headed for bankruptcy if it didn’t raise the expected amount from its stock offerings.
Bed Bath owes money to thousands of creditors. It owes the biggest amount — $1.2bn — to the Bank of New York Mellon (NYSE: BK). The company has obtained a $240mn debtor-in-possession financing from investment firm Sixth Street Partners to keep it afloat through the bankruptcy process.
- Bed Bath was founded in 1971 as a “big box” store offering a variety of merchandise at low prices. The company prospered in the ensuing decades and hit peak annual sales of $12.3bn in 2017. By 2022, its annual sales were down to $7.9bn. A year later, it has become insolvent.
- In March 2022, Canadian entrepreneur and meme stock king Ryan Cohen bought a nearly 10% stake in Bed Bath and supposedly had plans to revitalize the struggling retailer. But by August 2022, he sold all his shares and pocketed a $68mn profit, or a 56% gain on what he paid for his shares a few months before.
- Cohen wasn’t the only Bed Bath profiteer. Jake Freeman, a 20-year-old college student, bought $27mn worth of Bed Bath shares in July 2022 and sold them a few weeks later for a $110mn profit. (Freeman was well-connected enough to raise $27mn from a group of investors to fund his bet, something most 20-year-olds likely can’t do).
In September 2022, tragedy struck at Bed Bath when its Chief Financial Officer, Gustavo Arnal, died by suicide. Arnal leaped to his death from his high-rise residence in New York City and was declared dead at the scene by medical examiners. He was replaced in the interim by a subordinate shortly after, and in February 2023, Bed Bath appointed a turnaround specialist named Holly Etlin as its Chief Financial Officer.
Needless to say, Bed Bath’s bankruptcy filing wasn’t shocking. The signs had been there for a long time, even though some meme stock investors refused to acknowledge them. Bed Bath expects to close all its brick-and-mortar stores by June 30.