Bankrupt - Bed Bath & Beyond

one claims it's the company's only chance for survival PW Kodak is filing for chapter 11 bankruptcy protection [Music] what's up guys my name is Jake and welcome to the 18th episode of bankrupt if you've ever shopped for kitchen utensils Home Goods linen or if you just moved into your college dorm and you need the essentials on a budget then Bed Bath and Beyond was probably your go-to store and it makes sense why their locations were quite literally filled to the brim with an enormous selection of merchandise over the last 50 years the retailer built a massive presence in North America operating well over 1500 stores with over 60 000 employees and unlike their peers who had seen a great decline through the late 90s and early 2000s the company actually thrived all the way up to 2017 but recently that all came crashing down and most of the unique competitive and corporate advantages the retailer once profited from had now killed them this is an interesting one so today let's find out where this recently thriving retailer came from and the many missteps and executive complacency that ultimately LED them to bankruptcy this video is sponsored by me my brand new merch is out right now at shopritesunfilms.com stick around to the end of the video to find out more it began with Leonard Feinstein and Warren Eisenberg the two men were working at A Dying discount department store called arlins and both of them had seen the writing on the wall they also saw the industry moving towards specialty stores for individual product categories so they decided to partner up and create just that a specialty store focusing on bedroom linen and bathroom products they called it bed and bath and opened their first store within a strip mall in Springfield New Jersey it was 1971 and their small store did pretty well carrying brand names with customers clearly liking the boutique style feeling of a specialty store and home accessories especially at a time when the Suburban middle class was growing so bed and bath expanded further through the 70s and into the early 80s opening another 17 stores across the Northeast U.S in California but their retail position was being challenged by other small-scale retailers focusing on the segment as well mainly linen things they even had a similar name so Eisenberg and Feinstein came up with something to differentiate themselves they called it the bed and bath Superstore concept and opened one in 1985. they absolutely packed this new 20 000 square foot store with just about every choice you can imagine from their existing product categories but they also built out an extensive Home Furnishing section as well this gave customers the blessing of choice packing multiple Brands colors sizes and fabrics this is now known as a category killer meaning they offered an unmatched selection in a single category and they did this all at affordable prices bed and bath wanted to become the the go-to store for those specific needs and this more or less worked becoming a pretty large hit with their Target customers since the stores were now offering Home Furnishing products in 1987 they changed their name to reflect this new Superstore Direction changing it to what we know now as Bed Bath and Beyond through the late 80s and into the early 90s the brand continued to expand but only in a modest capacity opening just seven new Superstores by 1991 sales on the other hand were anything but modest blowing past 130 million dollars with an impressive net income of 10 million dollars all of which was just funneled back into the company for future growth Feinstein and Eisenberg were known to be frugal bosses saving money wherever they could and that helped keep profits High though the two did concede to Industry trends like an electronic inventory system management also emphasized the importance of customer service bed Bath and Beyond already broke the mold of existing home goods stores making shopping for home decorations and Comforts of fun and somewhat engaging experience the company wanted to reinforce that by making other aspects just as pleasant and they did so by offering a generous return policy keeping stores clean and tidy offering free shipping and cultivating a fast and friendly purchasing environment this kept customers coming back and allowed the word of mouth to be their primary source of marketing with over 30 stores now operating across the states Bed Bath and Beyond went public on NASDAQ in mid-1993 bolstered by the launch of their new flagship Manhattan store the company's stock was a hit nearly doubling its IPO in less than a year all while the company reported record sales of 216 million dollars and equally seller earnings competition was fierce though as Linen and Things essentially copied their entire product and and layout strategy their market share and overall sales were climbing as well regardless Bed Bath and Beyond continued to gradually expand through the late 90s entering the e-commerce space through bio to 1998. sales were exceeding expectations and just before the turn of the Millennium the company reached sales of one billion dollars in 1999 with an impressive two hundred dollars per square foot in sales with over 250 stores but the year 2000 would Skyrocket them into even further growth as sales had now doubled to two billion dollars and an additional 50 stores marking territory in 41 States through the early 2000s the company continued to expand aggressively the brand had now reached Across America with a brand image as equally massive as their growth strategy Bed Bath and Beyond became an integral part of the Home Furnishing shopping experience for many Americans along with their established Pro consumer practices the brand heavily encouraged coupon use sending out millions of the well-known blue 20 off coupons this was a clever marketing strategy and proved to be quite successful drawing in millions of deal hungry Shoppers by 2005 net income had soared to over 500 million dollars and crossed over 7 billion dollars in sales the company was well loved by both consumers and Wall Street with many analysts adoring the huge Returns the company's stock generated up more than four thousand percent since their IPO the company made their entrance into a new country in 2007 with stores in Canada but hit a speed bump with the recession of 2008 putting a dent in their net income and sales rather hard consumer spending was down and the stock fell with it but so did other brands as well linen things their longtime competitor ultimately declared bankruptcy during this time and closed all of their stores after converting to chapter 7. this allowed Bed Bath and Beyond to take control of the market share they left behind and ultimately reigned Supreme in the decades-long competition the brand sales then exploded from here on out with both massive expansion and appealing to trends of customers the company reported record sales and income year after year stores had now surpassed 1 000 across the United States and Canada with sales ascending past 10 billion dollars by 2013 the brand made an astonishing one billion dollars in net income which is a pretty incredible feat for a retailer especially in the early 2000s not to mention the fact that they only had 250 stores just 13 years prior however the cracks in the foundation of this enormous retailer were starting to form back in 2007 the retailer purchased the Buy Buy baby brand for 86 million dollars in 2017 they purchased the much smaller brand called Chef Central for just one million dollars the only problem there was that both of these companies were started and owned by the original Bed Bath and Beyond Founders sons and some in the industry were understandably calling these Acquisitions a direct result of nepotism and even corruption the company claimed that Feinstein and Eisenberg recused themselves from the actual transactions and that independent lawyers reviewed it and presumably approved the legality of the sales but I mean still the board of directors were also packed with a long time Loyalists and made up of people who have been serving on the board for well over a decade much longer than the norm of the industry this is what I would consider to be a recipe for a reluctance to change and listen to new opinions the years of success for the company were starting to wane and things were beginning to fall apart is that one billion dollars in net income in 2013 was the peak and the following couple of years saw a decrease in profits despite 2018 being their peak of sales at 12.3 billion dollars once analysts Revenue targets began to miss their stock also began falling and this started the beginning of the end with expenses growing exponentially and profit reaching a dangerously low points the company's leadership was due for a change investors agreed and in 2019 three activist investment firms acquired a five percent stake in the company to spark just that activist investment firms are basically private Equity groups that specialize in buying a minority stake in established public companies and oftentimes Force change when red flags begin appearing they also took issue with the aging and complacent board of directors the suspicious Acquisitions and the increasingly poor state of their store if you've ever been inside a Bed Bath and Beyond then you'll know it's a cluttered mess with a lot of product now this was seen as a competitive Advantage years ago when selection was King but now it just looks like a messy overwhelming junk pile employee morale was also a well-known issue with high employee turnaround and overall low enthusiasm as the activists had a lot to change and ultimately pushed out their CEO pressured both co-founders to step down and influence the resignation of nearly half the board of direct receipts by this point the retailer had over 1 530 locations across North America but expenses were mounting and the company was bloated by the end of fiscal year 2019 the brand had posted their first net loss since 1992 losing around 137 million dollars the activist investors began implementing their plan on turning things around starting with the closure of around 40 locations this was in tandem with their plan to control costs and cut down the bloated structure they had in place this meant cutting down of the number of suppliers they bought from and purchasing more of their stock from overseas instead of going through us-based middlemen those 20 off coupons were also reevaluated many people use them as the only reason to shop there and hesitated purchasing anything else that wasn't on sale Management's response was to place limits and tone down coupon use and distribution though this likely had more negative effects than good the customer experience was also looked at with a microscope testing out new store Concepts like the implementation of a cafe lab stores were open to test new product categories like food and drink all while the company announced they would be investing in private label Brands to help set their merchandise apart from others this was another aspect of the business the company had been struggling with consumers found it difficult to find a reason to shop at Bed Bath Beyond when everything sold there could just be found online in some cases direct from the product's brand for some those stores became a showroom to test out what those products felt like in person and then just order them online it also didn't help that Bed Bath and Beyond's website was a clunky mess that wasn't very pleasant to use especially compared to other competitors in the space so their market share in the online sphere was minimal at best to make matters even worse the pandemic hit stores were shuttered across the states and accordance to local Health procedures a massive shift was made to online Commerce and the company's footprint there was just not up to standard ultimately over 200 stores were permanently closed during this time and when things did start to reopen the financial health of the company was not looking good between 2020 and 2021 the company posted net losses of over 716 million dollars the retailer was running out of liquidity and their stock price was reflecting this Bleak circumstance this also meant they had issues with paying their suppliers which resulted in unstock shelves their strategy of introducing private label Brands didn't exactly go over that smoothly and instead of enticing new Shoppers to try them out it deterred regulars by replacing brand name products by June 2022 their CEO resigned and was replaced by Sue gov and her job was to keep the ship afloat by August another 150 stores were closed permanently along with a reduction in their Workforce by 20 percent the company ultimately decided not to sell Bye Bye Baby for cash and instead took out a loan worth about 500 million dollars which was mostly used to pay off debts with pressure mounting the company's CFO had taken his own life after being one of the targets of a class action lawsuit alleging that Executives were artificially inflating the company's stock in a sort of pump and dump scheme the company was on life support and they didn't hide it on January 23 2023 Bed Bath and Beyond came right out and said that there is significant doubt that the company would be able to continue through the year and that bankruptcy might be inevitable however their CEO did state that they have a Clear Vision for the future of the brand and that they just need time to execute but the reality of this would be put into serious question as Banks began halting lines of credit fearing insolvency a restructuring company was hired and the retailer announced they would be shutting down their Canadian division the brand was running out of cash on hand and with mounting losses and poor sales through the first quarter of 2023 bankruptcy was becoming more and more of an inevitability on March 30th Bed Bath and Beyond announced a 300 million dollar stock offering if all of this stock was sold this would generate around a billion dollars for the company but they also stated that if it didn't sell off they would likely be forced to declare bankruptcy sure enough their stock offering didn't pan out very well and on April 23 2023 Bed Bath and Beyond had declared chapter 11 bankruptcy protection the retailer had over 5.2 billion dollars in debt for years prior to the bankruptcy the company had been looking for a buyer to take over operations their position remained unchanged on that but stated that if they couldn't find a buyer in time they would just liquidate everything so without delay and seemingly no buyer interested the brand began winding down operations just as their stock plummeted and was ultimately delisted stores across the country all 360 of them began liquidating their stock the famous 20 off coupons finally met their end and were no longer accepted the day the liquidation began Bye Bye Baby their subsidiary retailer also began liquidations closing all of their 100 20 locations stores then began closing all around the country signifying the end of Bed Bath and Beyond's physical existence in the Retail Landscape their stock went from a high of eighty dollars in 2014 to just 43 cents a few days prior to their bankruptcy it was an enormous Fall From Grace but one many Saw coming while the original co-founders had a vision and built an incredibly successful and well-loved Company for decades the management within in the later years seemed to have gotten too comfortable with all of that success they became the products of the very thing they created the company to go against Bed Bath and Beyond was a trend Center in the industry it was the new era of retail from the post-war discount stores into a boutique style category killer but they got complacent with the Brand's success and the strategy that set them apart initially began to get old and outdated but there were other issues as well starting in 2004 and going all the way to 2022 the company spent 11.8 billion dollars in stock BuyBacks which I think some would call a greedy move that put the company in debt in hindsight it was obviously a terrible decision to do so especially when the company was Cash strapped in the later years they literally took out debts to buy back stock that would later become worthless critics also claimed that the company overpaid executive leadership all while they were reporting losses it's no wonder why company morale was down the retailer also just offered little reason for the modern Shopper to walk in they had no exclusive Brands and the shopping experience was chaotic and overwhelming for some and their online presence was just not up to standard prices in their stores were also just expensive actually they're kind of ridiculous this Ugg ugly resin and probably faux marble trash can is 72 dollars and this soap pump is an egregious 85 you can get a real marble pump for literally half the cost at an upscale home goods retailer like CB2 I mean these product prices were insane Shoppers were just falling at a favor with them and I know that because I was one of them when I first got my own Apartments I frequented their stores quite often and I'm sure many of you can relate but in my own experience I found their stores to be a complete mess of products most of which didn't seem to match the quality of the price points it felt more like a junky store or filled with a bunch of As Seen On TV crap most of which you could just find on Amazon rather than spending the gas money to drive all the way out there to one it felt tired and not something well thought out or designed with convenience in mind especially when places like Target or Walmart exist where you can get pretty much the same core items there plus a whole bunch of others without having to make a whole separate trip this was a fundamental shift in how customers viewed the company and it was a bad spot they found themselves in with over 1 500 stores and a lot of expenses to go along with it the writing was on the wall and you can tell if you visited their stores in the months or even years up to the bankruptcy some of the in-store footage in this video was filmed by my friend retail archeology he documented a few of the stores through the years and the decline was palpable the bankruptcy of Bed Bath and Beyond is interesting though as their rise to popularity was relatively recent most Mega brands in the US like Sears and JCPenney saw their rise in the 80s 90s and early 2000s but bed bath was different they saw most of their success in 2013 generating the most sales and the largest reach in 2017. their growth was monster virus and for millions of people it was the go-to place for your household goods but just as quickly as their rise they found themselves with an aging strategy that didn't work in the way they had it structured their corporate structure and unwillingness to adapt and recognize new trends ultimately killed them off it's unclear as to what will happen to the company from this point on it will likely exist in some e-commerce fashion probably snatched up by Tai Lopez since that's for some reason the new trend or maybe it isn't regardless this is likely the end of the line for the retailer one that was started half a century ago thrived for decades but is likely now Beyond recovery look Bed Bath and Beyond made it out of the 2008 recession rather unscathed actually they kind of lucked out with the death of their largest competitor unfortunately Linens and things had to join the 2008 recession support group right alongside the Palms Dubai in Fountain Blue well we got a shirt about it and it's not just that maybe you're wondering what happens when the Pyramids of Giza meets the Memphis Pyramid for the first time obviously they're going to play tourists to the mighty American pyramid yes this is our new apparel line there's an additional three designs from an abandoned ship convention where Mick barge is probably not welcome to an abandoned Mall sorry to lose its only friend the anchor store these are joined by three variations of the beautiful vintage BSF logo including a hat which I've been wearing pretty much every day since I've gotten it obviously with this I've taken a bit of a different route with this apparel line a more cute and fashionable approach but also connected to brights on Films I've been working on this for a while now with some very talented artists and designers to get this all ready the shirts are also super high quality and are very comfortable so if you want to go check out the new merch visit my online store by going to shopritesunfilms.com a link will also be in the description below thank you so much for all of your support I really do hope you enjoy the new merch and please send me pictures of you wearing them for a chance to be featured in a future episode of bankrupt and abandoned my name is Jake and thank you very much for watch foreign [Music]

Channel: Bright Sun Films

Views: 608,818

Keywords: bed bath and beyond, bed, bath, beyond, walmart, linens and things, bed n bath, bankrupt company, retailer, dead mall, abandoned mall, bed bath beyond, bed bath and beyond closing, liquidation, extinction, decline, documentary, hd, clean, new, 4k, 2023, 2024, failure, jake williams, bright sun films, full story, history, bad stores, tour, target, bankruptcy, what happened, abandoned

Id: armRWC8yI-Y

Length: 23min 10sec (1390 seconds)

Published: Fri May 19 2023