Here’s what happens next.
Bed Bath & Beyond has hit some hard times, potentially marking the end of an era for many college students and newlyweds who used the store as their go-to home goods source.
On Sunday, the retailer filed for Chapter 11 bankruptcy protection after facing a years-long decline in sales and stock. “Thank you to all of our loyal customers,” the company said on its website. “We have made the difficult decision to begin winding down our operations.”
Chapter 11 is named after a section of the U.S. Bankruptcy Code. While the term sounds ominous, several major companies — including General Motors and K-Mart — have used it at one time or another to keep business afloat and restructure their financial obligations. This may include downsizing business operations to reduce expenses and renegotiating debts.
But this decision didn’t come as a surprise. Once known for its overstuffed shelves and impressive kitchenware selection, the home goods store has been on the brink of bankruptcy for months. In fact, the final downfall started back in January, when it posted a $393 million quarterly loss and said in a government filing that it was in default on its loans. Bed Bath & Beyond is hardly the first well-known chain to buckle: The retail industry as a whole has taken a hit. JCPenney, Neiman Marcus, and J.Crew all filed for bankruptcy in 2020 at the height of Covid.
Still, many are mourning the loss of the store that helped many of them fill the empty corners of their dorm room or first apartment. “Bed Bath & Beyond had almost become a manual for how to adult,” 54-year-old Chris Dancy told The New York Times. Some in New York City even flocked to a nearby store, with one customer saying he was “devastated” by the news.
So, when will it start closing doors, and what will happen to your coupons? Here’s a look at what you can expect in the coming days and weeks.
Why is Bed Bath & Beyond closing?
Founded in 1971, the iconic brand quickly became the go-to destination for home goods but the company has been struggling for some time now. Though some experts attribute the company’s initial decline to the rise of online shopping, the company’s store footprint shrunk last year, when it closed 150 locations and laid off thousands of workers. Then there was the tragic death of chief financial officer Gustavo Arnal, who leaped from a luxury skyscraper in downtown Manhattan after he was accused of stock fraud.
While the company announced it would shutter another 87 stores this year, things started to look up when it was able to sidestep bankruptcy in February after using a public stock offering to raise more than $1 billion. Ultimately, that plan, backed by Hudson Bay Capital Management, was nixed after the company failed to hold up its end of the deal and keep up stock above $1 a share.
Still, there are a couple of factors behind Bed Bath & Beyond’s downfall. In addition to increasing competition from retailers like Amazon, experts say the company also suffered a series of bad investments, patchy inventory, and a lack of customer interest. Neil Saunders, managing director of analytics company GlobalData, believes the majority of these shortcomings were self-inflicted, pointing to how chief executive Mark Tritton scaled back the company’s widely popular discount coupons.
“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 told The Washington Post.
What’s happening to Bed Bath & Beyond?
The company plans to start winding down its operations starting on Wednesday. Though 360 locations across the country will remain open for now, all stores are expected to be officially closed by June 30, according to the bankruptcy filing.
In the meantime, the retailer said it secured a commitment of about $240 million in debtor-in-possession financing from Sixth Street Specialty Lending to help keep operations afloat amid the bankruptcy process.
By this point, you’re probably wondering if you can still use your coupons. The answer is yes, but you better act fast: Any remaining 20 percent off coupons or gift cards won’t be accepted beyond Tuesday. The company has also vowed to honor returns and exchanges for items bought before Sunday until May 24, and to accept gift cards and certificates until May 8.
But there’s still hope for the retailer yet: A bankruptcy filing doesn’t necessarily mean that a company is going out of business for good. For now, Bed Bath & Beyond is planning to either sell some or all of its business, and if it finds a buyer, it could suspend store closings. That said, this prospect isn’t a guarantee, and the store might end up having to liquidate and go out of business after all.
“Ultimately, if it emerges from bankruptcy at all, Bed Bath & Beyond will be a shadow of its former self,” Saunders said.
