Bed Bath & Beyond Files for Chapter 11 Bankruptcy Amid Covid-19 Pandemic
Bed Bath & Beyond, the US-based home goods retailer, filed for Chapter 11 bankruptcy on Sunday, as it struggles to stay afloat amid the coronavirus pandemic. The company said that its 360 Bed Bath & Beyond and 120 BuyBuy Baby stores and websites would remain open for now, but over time they would be closed. The retailer has been losing market share and reporting a decrease in quarterly sales, and the Covid-19 pandemic has only worsened its financial situation. During the era of “category killers” Bed Bath & Beyond was considered a shining example of this retail phenomenon. These chains, like Toys “R” Us, Circuit City, and Sports Authority, dominated a specific category of retail. Eventually, those corporations also declared bankruptcy due to customers shifting from large specialty stores to internet alternatives such as Amazon.
Contrary to the claims of certain experts, the downfall of Bed Bath & Beyond does not signify the unavoidable downfall of physical retailers who find it difficult to rival Amazon.com Inc. According to suppliers, analysts, and former managers and employees, Bed Bath & Beyond is mainly accountable for its own downfall. Over the course of almost ten years, the management groups of the retailer gradually made choices that drove the company to the edge of economic ruin.
Mark Tritton, a former executive at Target, assumed leadership in 2019, supported by investors and a daring new plan. He reduced the usage of coupons and inventory of national brands and gave more preference to the private-label brands of Bed Bath & Beyond. However, the merchandise shift failed to land with customers, and the strategy ended up filling stores with too many unknown private-label products at the expense of well-known national brands.
To avoid bankruptcy, the struggling retailer had intended to generate approximately $1 billion in February by issuing preferred stock and warrants. In late March, Bed Bath terminated the agreement and revealed intentions to vend $300 million worth of its shares. Additionally, the company issued another caution that it may need to file for bankruptcy if it is incapable of obtaining the necessary funds.
To help fund its operations in bankruptcy, Bed Bath & Beyond said that it has received a commitment of approximately $240 million in debtor-in-possession financing from Sixth Street Specialty Lending Inc. The company estimated it had assets of $4.4 billion and total debt of $5.2 billion as of late November 2019, according to a court filing. BNY Mellon holds the largest unsecured claim of $1.18 billion among the 25,001 to 50,000 creditors. Holly Etlin, the chief financial officer of Bed Bath & Beyond, has been appointed as the chief restructuring officer to oversee the bankruptcy proceedings.
Bed Bath & Beyond said that it expects customers will be able to use gift cards through May 8 and redeem Welcome Rewards until May 15. The company announced its intention to market some or all of its business for sale. In the event that a buyer is found, store closings will be ceased by Bed Bath & Beyond. In the absence of a potential buyer, it is probable that Bed Bath & Beyond will face liquidation and ultimately cease operations.
0. “Bed Bath & Beyond files for Chapter 11 bankruptcy” KFSN-TV, 23 Apr. 2023, https://abc30.com/bed-bath-and-beyond-files-for-chapter-11-bankruptcy/13173895
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