Bed Bath and Beyond Files for Bankruptcy

Bed Bath & Beyond filed for Chapter 11 bankruptcy Sunday, a move widely expected after the housewares chain was unable to raise $300 million in capital amid its plunging sales and share price.

via Washington Post:

In a statement, the Union, N.J.-based chain said that it and its subsidiaries filed for Chapter 11 relief in New Jersey “to implement an orderly wind down of its businesses while conducting a limited marketing process to solicit interest in one or more sales of some or all of its assets.” In that same release, chief executive Sue Gove pledged that the company “will continue working diligently to maximize value for the benefit of all stakeholders.”

The company’s downfall came as no surprise. Once known for its overstuffed shelves and vast kitchenware selection, it suffered a years-long decline set off by bad investments, patchy inventory and dwindling customer interest.

Neil Saunders, managing director of analytics company GlobalData, pointed to these self-inflicted wounds, not market forces, as the source of the 52-year-old retailer ’s woes.

“If there is a single point of failure … it’s that the company stopped being relevant to consumers,” he said in an email Sunday. “Arguably, this goes back a long way thanks to the rise of online and the improvement of home offers at rivals like Target. Against this increased competition, Bed Bath and Beyond’s approach to retail — which lacked inspiration — was found wanting.”

Saunders pointed to former chief executive Mark Tritton in particular, whose choices — such as introducing private labels and scaling back popular discount coupons — “quickly alienated existing customers and failed to attract new ones.”

In a separate email to customers, the company pledged to honor returns and exchanges for items bought before Sunday until May 24, and to accept gift cards and certificates until May 8. But coupons and Welcome Rewards discounts will be good only until April 26. Online orders placed before and after the filing will be fulfilled, the company added.

To help support operations during the Chapter 11 process, the retailer said it secured a commitment of about $240 million in debtor-in-possession financing from Sixth Street Specialty Lending. The company’s 360 stores, as well as its websites and its 120 buybuy BABY locations, “will remain open and continue serving customers as the Company begins its efforts to effectuate the closure of its retail locations,” it said.

The crisis began in earnest in early January, when the company posted a $393 million loss for the quarter that ended Nov. 26, pushing fiscal year-to-date losses to more than $1.1 billion. Gove said at the time that Bed Bath & Beyond would slash costs by $80 million to $100 million and lay off an undisclosed number of employees.

Then, on Jan. 26, the company said in a filing with securities regulators that it did not “have sufficient resources to repay” loans of $550 million from JP Morgan and another $375 million from Sixth Street. A week later, Bed Bath & Beyond reported that it had missed a $28 million interest payment on its bonds and announced it was closing an additional 87 stores on top of the 150 it had shuttered in August.

The company was able to delay an impending bankruptcy in February when it struck a $1 billion share-sale deal with hedge fund Hudson Bay Capital Management and other investors after it failed to convince a bank to lend funds. But the deal fell apart last month when Bed Bath & Beyond disclosed that comparable store sales plunged 40 to 50 percent year-over-year in the fourth quarter.

Gove announced earlier this month that the company was preparing for bankruptcy, and on Thursday, it submitted a loan-default filing that included another bankruptcy warning.

…just let us know when those liquidation sales start happening. We need some new towels.

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