Bed, Bath, & Beyond and the Fight to Avoid Bankruptcy

Written by Louis Leonardi IV

Nearly a month ago, name-branded company Bed, Bath, & Beyond (BBBY) almost had to file for bankruptcy. Founded by Warren Eisenberg and Leonard Feinstein in 1971, Bed Bath & Beyond engages in the operations of retail stores, domestic merchandise, and home furnishings. The company products include bed linens, bath items, kitchen items, basic housewares, and general home furnishings. Headquartered in Union, New Jersey, the company continued to grow steadily until the middle 2010s. Since that time, company revenue has decreased, and the value of Bed Bath & Beyond has suffered to this day.

From 2012 to 2019, one reason Bed Bath & Beyond sales slowed was a result of the shift to online shopping. As quoted in a Wall Street Journal interview earlier this year, founder Warren Eisenberg admitted, “We missed the boat on the internet” (Zuckerman 1). Online shopping weakened Bed Bath & Beyond’s revenues over the decade because of companies selling similar goods online, such as Amazon. During this decade, other large companies such as Target and Walmart were able to sell comparative products the same as Bed Bath & Beyond but at lower prices. These companies could sell the same products at lower prices because they were selling goods in multiple markets. As a result, larger companies could afford to price products with no margins. These companies were in markets for more products than Bed Bath & Beyond, allowing them to sell goods at lower prices in specific markets. Because Bed Bath & Beyond could not keep up with online shopping and its competitors could sell similar products to consumers at lower prices, the value of the company decreased over the course of the 2010s.

In 2019, Bed Bath & Beyond decided to bring in a new CEO, Mark Tritton, to restructure the company to keep up with market competitors. To improve the consumption at Bed Bath & Beyond, Mark’s plan was to improve the in-store and online shopping experiences for customers and widen the company’s merchandise assortment. By doing this, the company assumed it would revive home-goods retail and outlast competition at Amazon and Target. Shortly after Mark’s introduction to the company, the world was introduced to COVID. Mark’s plan failed to bring in expected sales with the pandemic looming. Company sales sunk 17% in 2020 and 15% in 2021 (O’Brient 3). In 2022, Mark stepped down as CEO of Bed Bath & Beyond.

After Mark’s departure as CEO, struggles continued for the company because of rising inflation rates throughout the end of 2022. Second-quarter sales reported in September demonstrated a 28% drop in net sales compared to the year before (O’Brient 4). This was proof people started buying what they needed rather than things they wanted. Bed Bath & Beyond has continued to struggle to date, but in early February, hedge fund Hudson Bay Capital Management decided to provide the dying company with a lifeline. Hudson Bay provided Bed Bath & Beyond with a $1 billion investment; $225 million was paid upfront and the rest was invested over the year.

Part of the reason George Antonopoulos, the managing partner at the hedge fund, offered Bed Bath and Beyond a lifeline is due to the loyal band of retail investors keeping the company afloat. This move bought the company more time. Although Hudson Bay provided Bed Bath & Beyond with more time to rebuild their company, they were still forced to close hundreds of stores across America in addition to shutting down operations in Canada. Antonopoulos saw lots of upside in the company if it were to stabilize its business. The name brand of Bed Bath & Beyond has already been established, so if they were to weather the bankruptcy storm, they could yield revenues that would lead to significant gains for Hudson Bay. On the other hand, the possibility of a downside would result in limited damages to Hudson Bay because of the stock’s high trading value from meme stock trade investors.

Even though Bed Bath & Beyond is still expected to file for bankruptcy by the end of the year, there is promise in the company’s future because of its new CEO. Appointed in October 2022, Sue Gove took the position to revive the company’s state. She serves as a bright spot for the company after reviving companies like Zale Corporation and Golfsmith. These were companies in similar situations to Bed Bath & Beyond that she could restructure. Unfortunately, these companies are not the same size as the large company she is forced to deal with now. With Gove as CEO, there is hope that Bed Bath & Beyond can make a return and avoid bankruptcy.

Outside of Gove, it is difficult to believe that Bed Bath & Beyond can revive itself by the end of the year. For one, the possibilities of other company acquisitions are doubtful. The large Bed Bath & Beyond retail stores are too large for companies such as Dollar Tree to buy out. At the same time, these stores are too small for larger companies like Target or Walmart to purchase. In addition to issues in acquisitions, Bed Bath & Beyond still has the same problems of attracting customers from larger companies. They continue to use a 2010s business model for a 2020s market. Since its market capitalization high of about $17 billion in 2013, the company’s market capitalization has plunged to around $178 million to date (Tayeb 3). The future does not look promising for Bed Bath & Beyond.

Although Hudson Bay is providing Bed Bath & Beyond with a $225 million initial investment, the company needs to sustain itself for the rest of the year in order to receive the rest of the $1 billion. They were able to squander a potential filing for bankruptcy. But, this move only gives Bed Bath & Beyond management more time to invest. Even with more time, the return of Bed Bath & Beyond is unlikely as such a competitive market they have already been ousted.

Works Cited

Holmes, Thomas Niel. “Why Hudson Bay May Not Be Able to Save Bed Bath & Beyond

(BBBY) Stock.” InvestorPlace, 8 Mar. 2023,

https://investorplace.com/2023/03/why-hudson-bay-may-not-be-able-to-savebed-bath-beyond-bbby-stock/.

“How Bed Bath & Beyond Avoided Bankruptcy” by Suzanne Kapner, published in the

Wall Street Journal on January 7, 2021. Link:

https://www.wsj.com/articles/how-bed-bath-beyond-avoided-bankruptcy-adef9ad4

Lopez, Amelia Lucas. “Bed Bath & Beyond names Mark Tritton as president and CEO,

stock soars.” CNBC, 9 Oct. 2019,

https://www.cnbc.com/2019/10/09/bed-bath-beyond-names-mark-tritton-as-president-and-ceo-stock-soars.html.

Smith, John. “Bed Bath & Beyond’s Timeline from Meme Stock to Bankruptcy.”

Business Insider, Insider Inc., 8 March 2023, https://markets.businessinsider.com/news/stocks/bed-bath-and-beyond-timeline-meme-stock-bankruptcy-2023-3.