The rise and fall of Bed Bath & Beyond, once a beloved retailer that's now filed for bankruptcy
Bed Bath & Beyond, founded in 1971, has long been a go-to destination for home goods.
However, the retailer has recently struggled financially and filed for bankruptcy on April 23.
Take a look at the rise and fall of the retailer loved by many shoppers.
Once the golden child of big-box stores, Bed Bath & Beyond filed for Chapter 11 bankruptcy protection in New Jersey on April 23.
The company said in an SEC filing in January that it had "substantial doubt" it can continue operating.
The bankruptcy came after months of tumult. In September 2022, Bed Bath & Beyond announced it would be closing 150 stores and slashing 20% of its corporate positions in an effort to cut costs.
In June 2022, it reported a $358 million net loss in its first quarter, and subsequently announced it was replacing CEO Mark Tritton and a number of other executives in yet another attempt to reorganize its leadership.
The situation worsened when activist investor and GameStop Chairman Ryan Cohen sold his 9.8% stake in the company in January. Analysts warned the company may have been in its "end days."
Then, in September 2022, the company's CFO Gustavo Arnal was discovered dead after a fall from a New York City building. The CFO had been the subject of a lawsuit around insider trading.
Bed Bath & Beyond was once a leading home goods retailer, appealing to shoppers across the nation with its strategy of abundance. The beloved store, which lined strip malls nationwide, became known for its huge assortment of products spanning every color and style.
Over the years, it became a go-to for just about anything for the home and — true to its name — beyond.
We took a closer look at Bed Bath & Beyond's rise from a small linen store in New Jersey to a major national retail chain filing for bankruptcy.
Bed Bath & Beyond was founded in 1971 in New Jersey by Warren Eisenberg and Leonard Feinstein.
The duo had formerly worked in management at Arlans, a local discount chain, and saw opportunity for growth in the bed and bath categories.
"We had witnessed the department store shakeout, and knew that specialty stores were going to be the next wave of retailing," Feinstein told the trade publication Chain Store Executive in 1993.
It was originally called Bed 'n Bath, to reflect its specialty linens and bath products. The company would later rebrand to Bed Bath & Beyond in 1987.
By 1985, Bed Bath & Beyond had expanded to 17 locations, primarily in the greater New York area and California.
The 1980s also marked an era of increased competition for Bed Bath & Beyond, thanks to the rise of stores like Linens 'n Things.
In response, the company launched in 1985 its first superstore concept, a 20,000-square-foot store that would become the model for the modern Bed Bath & Beyond store.
The company has been widely credited as being at the forefront of the superstore movement in America.
This new massive store featured a wide array of brands and products in nearly every color and style, setting it apart from department stores at the time that tended to stock a limited assortment of specialty collections.
Source: Funding Universe
This strategy is known by analysts as the "category killer," a method also employed by retailers like Toys R Us, Best Buy, and Costco.
This method is intended to bring more shoppers into stores by selling a little bit of everything across all categories and consumer demographics.
Over the next few years, Bed Bath & Beyond opened more superstores in New Jersey, California, Virginia, Illinois, Maryland, and Florida.
Source: Funding Universe
Its new store model, which smartly grouped product categories and strategically placed impulse buys near the registers, helped sales reach $134 million by 1991.
Source: Funding Universe
Bed Bath & Beyond filed for an IPO in June 1992.
As the company continued to grow, it added popular categories like electric appliances.
In 1999, it reached $1 billion in sales.
Source: Funding Universe
By the start of the millennium, Bed Bath & Beyond had 311 stores across 43 states.
Source: Funding Universe
In 2002, Bed Bath & Beyond acquired the health and beauty retailer Harmons, followed by the holiday chain Christmas Tree Shops in 2003.
Over the next 10 years, the company continued to focus on acquisitions, including purchasing Buy Buy Baby in 2007.
Bed Bath & Beyond additionally purchased both Linen Holdings and Cost Plus World Market in 2012.
By then, Bed Bath & Beyond began to hold a prominent place in popular culture, appearing in shows like "Broad City."
During this period, big-box stores like Bed Bath & Beyond began to show signs of struggle, as consumers turned to e-commerce and other cross-category competitors like Walmart and Target.
Source: Racked
Suddenly, stores like Linens 'n Things were going out of business.
In May 2019, CEO Steven Temares was ousted by a group of activist investors who called for his resignation in a brutal 168-slide presentation. Several board members also stepped down at the behest of investors.
In the presentation, the investors called company leaders at fault for failing to adapt to the modern retail landscape and causing sales to tank.
In November 2019, former Target CMO Mark Tritton took over for interim CEO Mary Winston as the company's new leader.
Source: Business Insider
While some experts at the time anticipated that the appointment of Tritton — who formerly served as chief merchandising officer at Target — would bring promise, it wasn't expected to be an easy turnaround.
Source: Forbes
Under Tritton, the company attempted to adopt a less "cluttered" and more organized shopping experience, including implementing "the biggest change in its product assortment in a generation."
The revamp involved reducing its product selection and launching its own private-label brand.
Despite a boom in sales at the beginning of the pandemic, thanks to an increased interest in home goods, Bed Bath & Beyond's newly limited product selection exacerbated supply-chain issues, leading to empty shelves and frustrated shoppers.
Source: Insider
Sales continued to decline, worsening with record-high inflation and decreased customer demand in recent months, according to Tritton.
"Our business has been impacted by extraordinary macroeconomic factors, such as the derailing of the global supply chain, continued disruptions from the Omicron variant, unprecedented inflation, rising interest rates, and a turbulent geopolitical landscape which have also weighed on consumer confidence," Tritton told investors in April.
In June 2022, the company announced it would replace Tritton as CEO, as well as swap out several top executives, marking yet another leadership shakeup for Bed Bath & Beyond.
The company became the subject of a meme-stock rally in August 2022, thanks largely to activist investor Ryan Cohen.
Bed Bath & Beyond shares soared 29% earlier in the month due to meme-stock traders jumping on the stock. The effort was inspired by Cohen — head of RC Ventures, as well co-founder and former CEO of Chewy and a chairman of GameStop — betting on the company, according to CNBC.
However, shares plummeted after Cohen announced he was selling his holdings later in August 2022.
Source: Insider
On August 31, 2022, Bed Bath Beyond announced it would be closing an estimated 150 stores and slashing 20% of its corporate staff.
The announcement was made ahead of the company's earnings call with investors, during which it announced that sales had dropped by 25% in its most recent quarter.
Source: Insider
The closures and layoffs would help the company cut costs by $250 million through the end of 2022, the company said.
Bed Bath & Beyond has also secured more than $500 million in new financing as it looks to right-size the business.
"The company continues to evaluate its portfolio and leases, in addition to staffing, to ensure alignment with customer demand and go-forward strategy," Bed Bath & Beyond said in a press release.
The chain's CFO died suddenly in September 2022.
On September 2, Bed Bath & Beyond CFO Gustavo Arnal was found dead after a fall from a New York City building. Arnal had recently been named in a federal class-action fraud lawsuit, which also named Cohen.
The suit claimed that Cohen and Arnal were working together in a "fraudulent scheme to artificially inflate the price of Bed Bath & Beyond's publicly traded stock."
Bed Bath & Beyond executive Laura Crossen was named as Arnal's temporary successor.
Troubles continued for Bed Bath & Beyond at the start of 2023, as the company announced it was considering filing for bankruptcy.
The company said in an SEC filing in January that it had "substantial doubt" it could keep operating.
For the quarter ending November 26, 2022, the company expected a loss of roughly $386 million, and a dip in quarterly sales of $600 million, compared to a year earlier.
The retailer's shares have fallen 87% this year, valuing the company at just $138 million on April 21.
The home goods retailer filed for Chapter 11 bankruptcy protection on April 23 after failing to improve its situation.
Holly Etlin, who was appointed as interim CFO in February, has been tapped by the company to serve as chief restructuring officer and will oversee the liquidation and sale process.
Former Insider reporter Áine Cain contributed to an earlier version of this story.
Read the original article on Business Insider
