Bed Bath & Beyond bankruptcy: $1b blunder behind giant’s collapse

But after a years-long decline that saw losses surpass a billion dollars annually, followed by months of speculation, the retailer confirmed on Sunday it had filed for bankruptcy, with no hope for salvation.

“Thank you to all of our loyal customers. We have made the difficult decision to begin winding down our operations,” a message at the top of the company’s website now states.

It comes after shares of the company closed at 29 cents on Friday, giving it a market value of $136.9 million (A$203m). The stock is down about 88 per cent this year. Last April, it was trading around $20 a share.

Bed Bath & Beyond shares took a big dive in January as it warned of “substantial doubt about the Company’s ability to continue as a going concern,” a sign that was widely interpreted to mean it would file for bankruptcy.

The company said at the time that it expected a loss of $386 million (A$576m) in the just-finished quarter then moved to pull out all the stops to try and stay afloat.

In February, it secured what was then considered a Hail Mary stock offering that was expected to infuse more than $1 billion (A$1.4b) in equity into the company, but it fell drastically short and brought in only $360 million (A$537m), the company said.

At the end of March, Bed Bath & Beyond announced another stock offering it hoped would bring in $300 million (A$448m), but that news sent the share price tumbling and it struggled to raise the funds it hoped the offering would provide.

As of April 10, the company had sold approximately 100.1 million shares and raised only $48.5 million, CNBC reported.

In filings, the company warned if it didn’t raise the anticipated proceeds from the offering, it would likely have to file for bankruptcy protection and see its assets liquidated – which is exactly where the company now finds itself.

Bed Bath & Beyond said in a statement that it had sought bankruptcy protection “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”.

According to Bed Bath & Beyond’s bankruptcy filing made on Sunday in the US District Court in New Jersey, it has a whopping $US10 billion (A$14.9b) in liabilities and assets of just $US1 billion (A$1.4b).

Closing sales at the stores will start on Wednesday.

In a statement, Bed Bath & Beyond said it voluntarily made the filing “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”.

The business says it has secured a loan worth $US240 million (A$358 million) in debtor-in-possession financing from a lender to support its operations during bankruptcy, with the firm hoping to find a buyer to take over the troubled chain.

If it’s able to find a buyer, Bed Bath & Beyond will halt store closings. But if a buyer doesn’t come forward, Bed Bath & Beyond will likely be liquidated entirely and go out of business.

It’s also possible the company could emerge from bankruptcy as an online-only retailer, said Neil Saunders, an analyst at GlobalData Retail. “Ultimately, if it emerges from bankruptcy at all, Bed Bath & Beyond will be a shadow of its former self,” he said.

It has been a stunning fall from grace for the brand, which became a pop culture icon in the 1990s and 2000s and which was valued at $US81 ($121) per share at its peak in 2014.

As sales plummeted last year, the company struggled to maintain supply in its stores, and share prices tumbled.

While competitors like Amazon and Target invested heavily in improving the online shopping experience in recent years, Bed Bath & Beyond laboured at “evolving” its business and adapting, Richard McMahon, a former executive at the company who departed in 2015, told the New York Times.

“The internet started to become real and consumer behaviour was changing through that process,” he added.

The company was founded in the US in 1971 and quickly rose to global prominence, with stores opening in Canada, Mexico and Puerto Rico as well.

Today there are around 14,000 employees at 360 worldwide stores and 120 buybuy BABY stores – an offshoot specialising in children’s items – and the company has vowed that most will remain open for now.

It’s a far cry from the 1560 Bed Bath & Beyond locations that existed as recently as 2017.

In September 2022, Bed Bath & Beyond executive Gustavo Arnal died suddenly after taking his own life in New York.

At the time, he was facing a $US1.2 billion (A$1.7 billion) “pump-and-dump” stock-fraud suit.

The month before his death, Mr Arnal sold 55,013 shares in Bed Bath & Beyond shortly before the company revealed it would close 150 stores and lay off about 20 per cent of its 32,000 workers as part of a restructuring plan to boost its money-losing business.

– With AFP