After months during which most outsiders thought Bed Bath & Beyond Inc. (NASDAQ: BBBY) could not survive, it hasn’t. News has come that it will file for Chapter 11 within days. (Customers are abandoning these 25 brands.)
Bed Bath & Beyond tried to raise $300 million recently. The deal fell through because its stock price fell below the level stipulated by the lenders. It then tried to sell stock. The price continued to crater. The stock sales only brought in a little more than $70 million, according to The Wall Street Journal. Staggered by a lack of funds, inventory suppliers had cut off Bed Bath & Beyond. Its shelves emptied, and it had less and less to sell. Comparable store sales dropped by about 40% in the period that ended February 25.
What killed Bed Bath & Beyond? First, its management, which had become a revolving door, never got the mix of inventory right. People turned to larger outlets like Amazon, Walmart and Target. Bed Bath & Beyond’s store footprint dropped as locations were shuttered. It became hard for many customers to find a store nearby.
Bed Bath & Beyond started to look like JCPenney, Sears and Kmart. The appearance of its stores deteriorated, another reason customers stayed away. Eventually, stores became like ghost towns.
What will happen to Bed Bath & Beyond now? It may become much smaller if someone wants to rescue it out of bankruptcy. Perhaps all that will be left is the online business, or only two or three stores that have outperformed the others will stay open. The other alternative is liquidation. Bed Bath & Beyond will break all its leases, and virtually everyone will be fired. It will end up on the junk heap of retailers that were once highly successful but could not keep up the momentum.
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