The days of hunting for those iconic 20%-off coupons are over, as Bed Bath & Beyond has announced its filing for Chapter 11 bankruptcy protection. For avid coupon collectors, it’s time to cash in before the end of Wednesday, as that’s when they’ll no longer be accepted.
But it’s not just the coupons that are going away. Bed Bath & Beyond has revealed plans to close all 360 of its namesake stores and 120 Buybuy Baby locations by June 30th, unless a last-minute buyer swoops in to save the day.
The Private Label Pitfall
The downfall of Bed Bath & Beyond cannot be pinned on economic uncertainty alone. The company’s management made a series of missteps, with the most significant error being its decision to focus on private-label products.
Mark Tritton, a former Target executive, led the charge on this strategy after being brought on board by activist investors in 2019. Tritton’s private-label success at Target seemed to offer a promising roadmap for other retailers.
Unfortunately, Bed Bath & Beyond’s attempt to recreate Tritton’s magic ended up more like a blender malfunction. In certain categories, such as kitchen appliances, well-known brands hold significant sway over consumer preferences. Once Bed Bath & Beyond replaced popular items like KitchenAid mixers and OXO garlic mincers with their own products, customers simply stopped coming.
What Lies Ahead
The next few months will see a massive going-out-of-business sale, reminiscent of the ones held by Toys R Us and Circuit City. For individual investors who jumped on the Bed Bath & Beyond bandwagon when it became a meme stock, it’s time to face the music. In bankruptcy proceedings, debtholders take precedence over shareholders, leaving meme-stock traders empty-handed.
In the end, the story of Bed Bath & Beyond serves as a cautionary tale for businesses attempting to replicate another’s success without fully understanding the nuances of their own market. The curtains have closed on this once-beloved retailer, marking a sad day for both shoppers and investors alike.