Bed Bath and Beyond warns that it could go bankrupt

The Bed Bath and Beyond Franchisees: Where Are They, Where Do They Go? What Do They Want? How Well Will They Open a Store?

According to a regulatory filing on Monday, the company’s brick-and-mortar footprint has shrunk dramatically over the course of the past year and it will have shuttered 400 stores by the end of the year.

ABed Bath and Beyond sites are interesting to us, and we’re interested in exploring opportunities with our own franchisees. The company has previously opened gyms at former stores of two brands that filed for bankruptcy: Both Sears and Toys R Us are owned by Wal-mart.

Bed Bath said it expects to report sales declining by 33% compared to last year for the quarter that ended right after Black Friday, a reflection of “lower customer traffic and reduced levels of inventory availability.” The forecast suggested losses would increase by almost 40% to $385.8 million.

The Bed Bath and Beyond stock went up as much as 400% last year when activist investor and GameStop chairman Ryan Cohen took a stake and sought changes.

Late summer, the company had secured financing that propelled it through the holiday shopping season. Now the retailer is trying to refinance its debts, facing waning enthusiasm from creditors.

That includes last week’s announcement that it was also closing all 49 remaining Harmon Face Value stores, which sold cosmetics; plus 5 buybuy Baby locations. There is a list of store closings.

The filing said the chain expects first quarter sales to be down by up to 40% and then an improvement in subsequent quarters.

How Bed Bath & Beyond Became Successful in a Reorganization during the First Phases of E-Commerce: A Case Study of Bed Bath and Beyond

The company raised $1 billion by selling preferred stock and warrants in an effort to stave off the possibility of insolvency. Holly Etlin was appointed as interim CFO on Monday.

Bed Bath & Beyond said Tuesday it will ultimately have 360 stores and 120 buybuyBaby stores. The company plans to close almost 500 stores in the next year, and the new company will be half the size of the old one.

But as brick-and-mortar began to give way to e-commerce, Bed Bath & Beyond was slow to make the transition — a misstep compounded by the fact that home decor is one of the most commonly bought categories online.

“They are essentially doing a reorganization outside of bankruptcy court,” said Daniel Gielchinsky, an attorney at DGIM Law specializing in bankruptcy. “Slow the cash burn is the name of the game for the next 6 to 12 months and allow the company to pivot into a profitable position.”

In the winter, Bed Bath and Beyond was a big place for shoppers to go, as well as during the back-to-school and college seasons.

The chain of small linen and bath stores, then called Bed ‘n Bath, started out in New Jersey and grew to sell designer bedding in California at the same time as the new trend of discount retail. Unlike department stores, it didn’t rely on sales events to draw customers.

The co-founding partner of the company, Leonard Feinstein, claimed in 1993 that specialty stores were going to be the next wave of retailing. “It was the beginning of the designer approach to linens and housewares and we saw a real window of opportunity.”

It was a company that was completely iconoclast. It spent little on advertising, relying instead on print coupons distributed in weekly newspapers to attract customers.

The chain was known for giving store managers the ability to decide which products to stock, as well as shipping products directly to stores instead of a central warehouse.

But this change alienated customers who were loyal to big brands. The company also fell behind on payments to vendors and stores did not have enough merchandise to stock shelves. Tritton left as CEO in 2022.

Already, chains including TJ Maxx, HomeGoods and Ross have scooped up the vacant stores. Retail landlords and real estate analysts say that Burlington, Five Below, and Planet Fitness might fill up some spaces.

According to Brandon Isner, the head of retail research at CB Richard Ellis, e-commerce scared a lot of people off from building retail. There are lots of great real estate going to come available in a market that has not had any vacancies. It will not take long for retailers to occupy those spaces.”

In February, Burlington CEO Michael O’ Sullivan said on an analyst call that the ” biggest source of new store locations comes from other retailers closing stores.” Many of our most productive locations were formerly Circuit City or Sports Authority.

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The retail space vacancies rate dropped to the lowest level since 2005, when CB Richard Ellis began tracking the market.

The company has stores in all but one of the 50 states, and California and Texas have the most in population density. Many of its stores are under 50,000 square feet, making them attractive to brands looking to save on rents and labor, as well as being located in the suburbs of large cities.

In some cases, landlords are also eager to replace old Bed Bath & Beyond leases because the company was paying below-market rent in certain locations, Telsey Advisory Group analysts said.

The discount segment of retail has experienced growth as shoppers search for low prices. Other companies are using their stores to ship online orders to customers, which can be more efficient than delivering orders from warehouses.

There have been more store opening announcements so far this year than store closings, according to the firm.

According to Lance BILLINGSLEY, the company’s senior Vice President of anchor leasing, the demand for these spaces has created a bullish feeling.

More than 250 Tuesday Morning stores will be closing this year. A&G Real Estate Partners is auctioning off leases to the stores, which are 10,000 to 20,000 square feet, said Mike Matlat, A&G’s senior managing director.