Bed Bath & Beyond, the once popular US home goods retailer that in recent years failed to keep up with the rise of online shopping, filed for Chapter 11 bankruptcy protection on Sunday.
The retailer has been frank about its problems since January after a weak holiday sales period, and has since struggled to manage its debt load with additional financing. The company said it intended to continue to operate its nearly 400 Bed Bath & Beyond stores, and additional 120 Buy Buy Baby locations, while it seeks to find buyers for “some or all of its assets”. It plans to close them all by the end of June.
Investment firm Sixth Street Partners, which previously offered a loan facility to Bed Bath & Beyond, is providing $240mn in debtor-in-possession financing for the bankruptcy proceedings.
Founded in New Jersey in 1971, the retailer joined the wave of so-called big box stores featuring extensive inventory of niche goods at low prices. By its peak in the 2010s, Bed Bath & Beyond had nearly 1,500 stores nationwide carrying everything from linens to toilet plungers to candies and candles.
“Millions of customers have trusted us through the most important milestones in their lives — from going to college to getting married, settling into a new home to having a baby” said chief executive Sue Gove in a statement.
Over the past year, the company has been beset with crises, including a campaign from activist investor Ryan Cohen, the ousting of its chief executive, and the death by suicide of its chief financial officer.
The campaign by Cohen, culminating in his divestment of about 12 per cent of company shares last August, resulted in weeks of turmoil in Bed Bath & Beyond’s share price. That same month, the company instituted a turnround plan with job cuts and a reduction in its store footprint, backed by the loan from Sixth Street and a revolving credit facility led by JPMorgan.
In February, Bed Bath & Beyond sought to forestall bankruptcy with a $1.025bn financing plan to restructure the company’s debts, including the sale of $255mn in convertible preferred stock. Shares in the retailer reached a brief peak of nearly $6 but have plummeted since, hovering in penny-stock range for the past month.
Chapter 11 filings show the retailer has $5.2bn in debts on just $4.4bn in assets.
According to the filing, the company plans to eventually close all brick and mortar stores by June 30, with aggregate net sales during the period expected to total $718mn against $1.8bn of debt.
additional reporting by Sujeet Indap in New York