The Bed Bath & Beyond Company: Results from the 2020 and 2021 Pandemic, and a Predictions for Next-Generation Retail Sales
During the Pandemic, the company had to close stores temporarily, as rivals remained open. The company’s sales went down in both 2020 and 2021.
Bed Bath & Beyond has faced a crisis after crisis in recent years: a rise and crash as a meme stock, a leadership shakeup, trouble with suppliers, a turnaround intended to improve upon a previous turnaround, store closures, job cuts, and the shocking news of its financial chief’s death.
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 by 400% last year when activist investor Ryan Cohen tried to change things at the company.
The company got financing late in the summer to help it through the holiday shopping season. Now the retailer is trying to refinance its debts, facing waning enthusiasm from creditors.
The announcement that it was also closing all of its remaining face value stores was made last week. There is a list of the new store closings.
The home goods chain predicts the first quarter to be down by up to 40% with the sales improving after that.
The company has avoided a bankruptcy filing for now by completing a complex stock offering that will give it an immediate injection of $225 million in funds and a pledge for $800 million in the future to pay down its current debt load.
Bed Bath & Beyond: The Coming Wave of Retailing in the e-Commerce Era, Says Jeffrey J. Gielchinsky
Bed Bath & Beyond will have over 350 stores eventually, it said Tuesday. That means that the company will have announced plans to close nearly 500 of the stores it had just a year ago, and the new company will be about half of the size of the old one
Online shopping weakened the allure of Bed Bath & Beyond’s fan-favorite coupons, too, because consumers could find plenty of cheaper alternatives on Amazon or browse a wider selection on sites like Wayfair
(W).
Daniel Gielchinsky, an attorney specializing in bankruptcy, said they are doing a reorganization outside of court. “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.”
Stores were a fixture for shoppers around the winter holidays and during the back-to-school and college seasons, and Bed Bath & Beyond also had a strong baby and wedding registry business.
The Bed ‘n Bath chain started as a small store in Springfield, New Jersey, but expanded to include stores in the northeast and west as well as in California. It was not reliant on sales events to bring in customers.
Leonard Feinstein said in 1993 that they saw the shakeout of the department store, and knew that specialty stores would 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.”
The company was an iconoclast. It spent little on advertising, relying instead on print coupons distributed in weekly newspapers to attract customers.
The chain gave store managers the ability to make their own decisions about what to stock and how to send products to stores, instead of a central warehouse.
But this change alienated customers who were loyal to big brands. Stores did not have enough inventory to keep up with demand, and the company fell behind on payments. Tritton was the CEO in 2022.
TJ Maxx, HomeGoods and Ross are the chains that have bought the empty stores. Retail landlords and real estate analysts say that budget gym Planet Fitness might fill up some of the spaces.
“E-commerce scared a lot of people off from building retail,” said Brandon Isner, the head of retail research at CBRE, a commercial real estate firm. There will be lots of great real estate available in a market with no vacancies. It will be easy for retailers to occupy those spaces.
According to O’ Sullivan, the biggest source of new store locations comes from other retailers closing stores. “So many of our most productive locations were formerly Circuit City or Toys ‘R’ Us or Sports Authority.”
Space Vacancy in the Twenty-One-Five Stores of a Large-Scale, Low-Size New York City Store
And for existing spaces, the retail space vacancy rate fell to 4.9% at the end of 2022 — the lowest level since CBRE began tracking the market in 2005.
The company has stores in all 50 states, with the most in population-dense areas in California, Texas, New Jersey and Florida. Plus, the majority of its stores are in the suburbs of mid-size and large cities and are under 50,000 square feet, all of which are attractive qualities in retail as brands trend toward smaller spaces to save on rent, labor and other overhead.
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.
Growth in the discount segment has been the most pronounced 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.
In fact, despite high inflation and a pullback in retail sales, physical store openings exceeded closings last year for the first time since 2016, according to Coresight Research.
“We feel pretty bullish based on the demand that we’ve seen that we’ll be able to release all of these spaces to other retailers,” said Lance Billingsley, the company’s senior vice president of anchor leasing.
There will be more than a hundred Tuesday Morning stores closing this year. A&G is auctions leases to stores that are between 10,000 and 20,000 square feet.