Saturday, February 11, 2023

Company Man asks 'The Decline of Bed Bath & Beyond...What Happened?' — a tale of the Retail Apocalypse

I posted Bed Bath & Beyond facing bankruptcy, a tale of the Retail Apocalypse for Friday the 13th last month. Since then, the chain's situation has continued to worsen, prompting Company Man Mike to ask The Decline of Bed Bath & Beyond...What Happened?

Bed Bath & Beyond has been going through some tough times lately. This video tries to identify the causes of those problems.
Company Man Mike compiled this list to explain what happened.

When I told my wife that I was writing a blog post about Bed Bath & Beyond, she immediately brought up how their weak online presence hurt them in competition with Amazon based on her personal shopping experience. The pandemic just exacerbated that problem. We haven't been in one of their stores since COVID-19 hit, but we've bought plenty through Amazon. On the other hand, I've gone into the nearest Target if only to pick up online orders, which I did when I had an eventful three days and two nights because of a severe storm knocking out my power, and my wife and I have had a lot of Target orders delivered to our house. Target is beating Bed Bath & Beyond both online and in the store, which Erik of Retail Archaeology showed that he did when he declared Bed Bath & Beyond: Headed For Bankruptcy!

Bed Bath & Beyond is a failure: In this episode we take an updated look at Bed Bath & Beyond.
Disappointed with Bed Bath & Beyond's selection, prices, and quality, Erik went to Target. He could also see the handwriting on the wall this past summer. The company hasn't filed for bankruptcy yet, but it's very close, as The Wall Street Journal reported Bed Bath & Beyond Misses Interest Payments as It Weighs Chapter 11 resulting in its lenders sending it a notice of default and CNN reported Bed Bath & Beyond is closing 149 more stores. See the list.
Bed Bath & Beyond has revealed the locations of the 149 stores it’s closing.

The new list of closures comes just a week after it announced it was shuttering 87 other stores. Over the past several months, it has closed or in the process of closing about 400 locations, which includes the closure of 5 buybuy Baby locations and all 49 remaining Harmon Face Value stores.

In total, the company is reducing the number of Bed Bath & Beyond stores from 760 to about 360, with the company keeping its most profitable stores open in key markets. At its peak in 2017, the storied brand had 1,552 stores open.
Wow! I was pretty sanguine in 2019 when I wrote "the chain is facing a crisis, but it's not in imminent danger of going out of business," but things have become much worse since then. For example, I wrote then that "I'm not terribly worried that the nearest location, just a little more than two miles west of me, is going to close any time soon." It closed last fall, so I guess three years was just longer than "any time soon" in August 2019.

Returning to Company Man Mike's list, he noted that the problem with the turnaround plan wasn't the plan itself, but management's rushing it in its impatience to get it to work. I think that's a common problem with American businesses, particularly publicly traded ones that are driven by quarterly bottom lines. Speaking of public trading, this is the second time I've seen stock buybacks being a driver of debt since GNC's bankruptcy. I wrote then "I might see stock buybacks as a cause of cash flow problems more often as the pandemic-caused recession continues." That recession ended almost as soon as it began and we may be closer to another recession later this year, but that prediction still came true.

That's it for the latest on the Retail 'Apocalypse. Stay tuned for Darwin Day and the Sunday entertainment feature.

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