Why is Bed Bath & Beyond failing? Reasons behind bankruptcy protection explored

The American big box company Bed Bath & Beyond has filed for bankruptcy after failing to raise money following several desperate attempts to keep the money afloat. The company made the announcement on Sunday, April 23, 2023, and came after it had been warning of a potential bankruptcy since January 2023. At the time, the company had issued a notice of "growing concern" that it may fail to recover cash expenditures after a dull holiday season.

Bed Bath & Beyond stated that 360 of its stores and 120 of its BuyBuy chains will be functioning for the time being as they gear up to shut down the business.

The company stated in a press release that it has filed motions with the New Jersey bankruptcy court seeking permission to sell the two brands. It has already vowed to close every Harmon FaceValue location.

The company's shares closed at 29 cents on April 21, 2023, as opposed to $20 in April 2022.

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Possible reasons behind Bed Bath & Beyond's closing

As per CBS News, experts have noted three reasons why Bed Bath & Beyond is running out of business and closing.

1) The company's traditional way of working in modern times.

The New Jersey company was founded in 1971 by Warren Eisenberg and Leonard Feinstein. It was a privately held business until it went public in 1992.

Although the business was initially booming, the momentum slowed down in the early 2000s. At the time, online shopping became a trend and customers preferred getting goods on their doorsteps.

Seth Basham, a Wedbush analyst, described the former Bed Bath & Beyond CEO Steven Temares as an "old school" retailer who wasn't willing to adjust.

By the early 2000s, the company had opened hundreds of stores across the United States. This included many large-footprint establishments that required a constant influx of consumers and reflected the shopping preferences of the majority of Americans at the time.

In 2019, former Target executive Mark Tritton was hired as the CEO of the company in hopes of getting on the e-retailing bandwagon, but it was too late by then.

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2) Bed Bath & Beyond's restructuring cost it millions but without enough payback

During his tenure at Bed Bath & Beyond, Tritton made two significant moves. He altered the look of the retail stores by reducing the number of products on shelves and also spent $625 million buying back shares.

As per CBS News, the move sent a concerning message to suppliers who provided items to the shops. They were concerned that the corporation wouldn't have sufficient funds on hand to pay them. Many reduced their operations with the company, resulting in fewer products on the shelves and dissatisfied consumers.

This was followed by the coronavirus pandemic. By 2019, people were becoming more reliant on e-retailers like Target, Wayfair, Amazon, and Walmart for home items. However, after the pandemic began, people's priorities changed to revamping their home office, which didn't really help the brand.

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3) Bed Bath & Beyond's Target-like private label was a bust

Under CEO Mark Tritton's leadership, the company's store managers began displaying and stocking shelves with products from Bed Bath & Beyond's brands.

However, the experiment failed because the items were low in quality and had an ineffective marketing campaign. In August 2022, the company announced that it would shut down three of its brands - Wild Sage, Haven, and Studio 3B.

Since then, the company has only seen issues that led to its latest announcement of bankruptcy.