Bed Bath & Beyond (BBBY) filed for chapter 11 bankruptcy protection on Sunday after a years-long decline in sales crippled the home goods retailer.
In a statement on Sunday, the company said its Bed Bath & Beyond and buybuy BABY stores will remain open “as the Company begins its efforts to effectuate the closure of its retail locations.” Sixth Street will provide the company with $240 million in debtor-in-possession financing, which will allow the company to continue operations during its wind-down process.
“Our teams have worked with incredible purpose to support and strengthen our beloved banners, Bed Bath & Beyond and buybuy BABY,” CEO Sue Gove said in a statement. “We deeply appreciate our associates, customers, partners, and the communities we serve, and we remain steadfastly determined to serve them throughout this process. We will continue working diligently to maximize value for the benefit of all stakeholders.”
Bed Bath & Beyond had been exploring “strategic alternatives” for its business dating back to January. That plan spiraled, as Bed Bath & Beyond’s first funding partner bailed after less than two months.
In the most recent quarter, Bed Bath & Beyond reported sales dropped 33% while adjusted losses totaled $225 million.
Shares of the company have lost 98% over the last year; year-to-date, the stock was down 88% through Friday’s close.
After peaking at $12.3 billion in 2017, sales at the retailer have collapsed in recent years, totaling just $7.9 billion in 2021, its lowest annual tally since 2009. Through the first three quarter of 2022, the company was on pace for sales that would match levels reported in the mid-2000s.
While private labels have become an increasing part of the growth story Target (TGT), Macy’s (M), Walmart (WMT), and other large retailers, Bed Bath & Beyond fell behind. The company’s decline was only accelerated by the pandemic as shoppers switched to online retailers like Amazon (AMZN) and Wayfair (W).
From bath towels and hand soap to air fryers and board games, Bed Bath & Beyond was once the go-to spot for suburban families and incoming college students to fill their homes.
But in recent years, Bed Bath & Beyond stores have been better known for discounts and empty shelves.
After losing a cumulative $1.4 billion from 2018-2021, the company lost more than a billion dollars through the first three quarters of 2022.
Last month, the company announced plans for a shareholder vote on a reverse stock split set for May 9 in an effort to shore up its liquidity and come into compliance with Nasdaq listing rules after its stock fell below $1 per share. The company noted in a SEC filing boosting the stock price was its last hope at survival.
“A failure to obtain shareholder approval for the Reverse Split Proposal will likely force us to file for bankruptcy,” the company said in an SEC filing.
Bed Bath & Beyond announced a funding deal with Hudson Bay Capital on February 7 to raise more than $1 billion over the next year. But provisions in that deal required Bed Bath & Beyond’s stock price stay above certain levels.
As the stock dropped from above $5 per share in February to less than $1 per share in late March, Hudson Bay’s funding deal ended.
The money from Hudson Bay, as well as Bed Bath & Beyond’s new funding partner, B. Riley Securities, was meant to restock shelves, pay back vendors, and revive sales at stores that were still operating.
“Having inventory and having the right inventory will help them,” Goldman Sachs analyst Kate McShane told Yahoo Finance Live on April 6 after Bed Bath & Beyond’s latest round of funding.
“I think the question is just in this environment where you do have a consumer that’s a little bit more thoughtful about their spending exactly what it will yield for someone like Bed Bath & Beyond.”
The end of meme madness
Bed Bath & Beyond stock closed at $0.29 ahead of the company’s bankruptcy filing, down roughly $80 a share from the company’s all-time high in December 2013.
In recent years, though, the stock hasn’t always been an accurate indication of the financial situation at the retailer.
As the meme stock craze of early 2021 sent shares of Gamestop, AMC and others soaring, Bed Bath & Beyond found itself in the mix. Investor Ryan Cohen, who catalyzed the market’s interest in GameStop back in late 2020, took a 9.8% stake in Bed Bath & Beyond in March 2022, news that sent shares soaring.
The idea of retail investor interest even became part of Bed Bath & Beyond’s revival strategy.
The company wrote in a SEC filing on April 5 that a reverse-stock split could help make the stock “more attractive” to investors.
In mid-August 2022, shares closed as high as $23. Cohen sold his entire stake in the company the same month.
Josh is a reporter for Yahoo Finance.
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