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Bed Bath & Beyond Goes Bankrupt as Turnaround Flops

After losing shoppers and money for months, Bed Bath & Beyond, the once-dominant home goods retailer, has filed for bankruptcy protection.

Bed Bath & Beyond Goes Bankrupt as Turnaround Flops

After losing shoppers and money for months, Bed Bath & Beyond, the once-dominant home goods retailer, has filed for bankruptcy protection.

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Good morning. First-quarter earnings for REITs enter round two this week, with key stocks acting as a barometer for peers in their subsector. Meanwhile, Bed Bath & Beyond has filed for Chapter 11 bankruptcy protection and will stop accepting its well-known 20%-off coupons in two days.

Market Snapshot

S&P 500
GSPC
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Pct Chg:
0.1%
FTSE NAREIT
FNER
708.35
Pct Chg:
-1.1%
10Y Treasury
TNX
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SOFR
1-month
5.010%
Pct Chg:
0.6%

*Data as of 4/21/2023 market close.

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CASH CRUNCH

Bed Bath & Beyond Goes Bankrupt Amid Turnaround Woes

On Sunday, US retailer Bed Bath & Beyond (BBBY) filed for Chapter 11 bankruptcy protection after last-minute fundraising efforts failed to save the business. The move puts thousands of jobs on the line.

End of an era: Bed Bath & Beyond, the store for everything home-related during the 1990s and 2000s, is finally throwing in the towel and has filed for bankruptcy. The company intends to wind down its business in an orderly manner and will conduct a limited marketing process to seek interest in selling some or all of its assets. However, its 360 Bed Bath & Beyond and 120 buybuy BABY stores and websites will remain open to continue serving customers.

State of play: As of a year ago, the retailer had approximately 955 stores and tens of thousands of employees. Bed Bath & Beyond estimated its assets at $4.4 billion and total debt at $5.2 billion in a court filing as of late November. The number of creditors falls between 25,001 and 50,000, with BNY Mellon holding the largest unsecured claim of $1.18 billion.

Between the lines: Bed Bath & Beyond may have to liquidate if no buyer is found, resulting in one of the largest going-out-of-business sales in 15 years. Coupons will be honored until April 26, gift cards until May 8, and returns/exchanges until May 24. The company plans to partner with an alternative platform for wedding registries.

What happened: Bed Bath & Beyond faced increased competition from Amazon and big-box retailers, leading to a decline in customer base. Former Target exec, Mark Tritton's actions of pursuing private-label products and cutting back on coupons further alienated loyal shoppers, resulting in his ousting in 2022. The company attempted to improve under new leadership, but by February 2023, it faced bankruptcy despite a financing deal with Hudson Bay Capital Management and a failed attempt to raise $300 million through a stock offering.

➥ THE TAKEAWAY

Bottom line: Bed Bath & Beyond's bankruptcy has put the jobs of thousands of employees at risk, along with their retirement savings and severance pay. The company's business has become increasingly fragile with $5.2 billion in total liabilities and $4.4 billion in assets, leading to an existential crisis. Despite management's efforts to prevent bankruptcy, the company's roller coaster years ultimately pushed it over the edge.

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📰 Daily Picks
  • SC Ports: In March, South Carolina Ports' Inland Port Dillon had its busiest month yet, handling over 4,300 containers due to an increase in agricultural exports and retail imports.

  • Ikea expands US reach: The Swedish retailer is investing around $2.2B over the next three years to expand its US presence with 8 big stores, 9 studios & 900 pickup sites, increasing its footprint in the sector.

  • Economic slowdown: Fannie Mae's ESR Group has revised its Q1 GDP growth forecast due to an increase in consumer spending data. However, it still believes that economic momentum is fading.

  • Mall of America: The owner of the biggest mall in the US has been granted another chance by the Supreme Court to get out of a deal made with Sears that has become increasingly unfavorable over time.

  • Mortgage delinquencies: After a lender moved to foreclose over a year ago, two Upper East Side multifamily apartment buildings will head to a bankruptcy auction next month.

  • Slippery slope: Experts suggest that a proposed Florida bill, which aims to limit investment in real estate from Chinese and other communist countries, could impact the wider foreign buyer market.

  • National to regional: Amazon’s CEO has announced a nationwide reorganization of the e-commerce giant's fulfillment network into eight interconnected regional hubs in his second annual letter to shareholders.

  • Tenant demand: Rexford Industrial Realty has announced a surge in income and operating levels in Q1. Their portfolio is almost fully occupied at 98%, with no more available warehouse space in the SoCal industrial market.

📈 Chart of the Day

According to RentCafe.com, Atlanta, Kansas City, and Albuquerque were the top three most popular cities for renters in April 2023 due to their affordability, job opportunities, and entertainment options. Detroit made an impressive debut at fourth place, indicating signs of revitalization and growth.

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