Struggling Bed Bath & Beyond files for bankruptcy protection
NEW YORK (AP) — Bed Bath & Beyond — one of the original big box retailers known for its seemingly endless offerings of sheets, towels and kitchen gadgets — filed for bankruptcy protection, following years of dismal sales and losses and numerous failed turnaround plans.
The beleaguered home goods chain made the filing Sunday in U.S. District Court in New Jersey and said it will start an orderly wind down of its operations, while seeking a buyer for all or some of its businesses. In the bankruptcy filing, the retailer said it anticipates closing all of its stores by June 30.
For now, the company’s 360 Bed Bath & Beyond stores and its 120 Buy Buy Baby sites as well as its websites will remain open to serve customers.
It listed estimated assets and liabilities in the range of $1 billion to $10 billion. The move comes after the company failed to secure funds to stay afloat.
In a statement, the company, based in Union, New Jersey, said it voluntarily made the filing “to implement an orderly wind down of its businesses while conducting a limited marketing process to solicit interest in one or more sales of some or all of its assets.”
The store closings will put thousands of jobs at risk. The company employed 14,000 workers, according to the court filing. That’s drastically down from the 32,000 as of February 2022.
Bed Bath & Beyond said it secured a commitment of roughly $240 million in financing from Sixth Street Specialty Lending, Inc. to allow it to keep operating during the bankruptcy process.
“It’s the death of an icon. A lot of people have grown up with it, ” said Neil Saunders, managing director of GlobalData Retail. “It’s an institution in retailing, but unfortunately being an institution doesn’t protect you from financial woes.”
Founded in 1971, Bed Bath & Beyond had for years enjoyed its status as a big box retailer that offered a vast selection of sheets, towels and gadgets unmatched by department store rivals. It was among the first to introduce shoppers to many of today’s household items like the air fryer or single-serve coffee maker, and its 15% to 20% coupons were ubiquitous.
But for the last decade or so, Bed Bath & Beyond struggled with weak sales, largely because of its messy assortments and lagging online strategy that made it hard to compete with the likes of Target and Walmart, both of which have spruced up their home departments with higher quality sheets and beddings. Meanwhile, online players like Wayfair have lured customers with affordable and trendy furniture and home décor.
In late 2019, Bed Bath & Beyond tapped Target executive Mark Tritton to take the helm and turn around sales. Tritton quickly reduced coupons and started to introduce store label brands at the expense of national labels, a strategy that proved disastrous for the retailer.
And the pandemic, which happened shortly after his arrival, forced the retailer to temporarily close its stores. It was never able to use the health crisis to pivot to a successful online strategy as others had, analysts said. And while many retailers were grappling with supply chain issues a year ago, Bed Bath was among the most vulnerable, missing many of its 200 best-selling items including kitchen appliances and personal electronics, during the holiday 2021 season.
The retailer ousted Tritton in June 2022 after two back-to-back quarters of disastrous sales. In recent months, the company, under the stewardship of recently appointed president and CEO Sue Grove, went back to its original strategy of focusing on national brands, instead of pushing its own store labels. But the company has had a hard time having suppliers commit to delivering merchandise because of the retailer’s financial woes.
This past holiday season, the stores were missing many key items, and it lost many customers, a problem that continued to plague the retailer through the winter and spring seasons.
The bankruptcy filing comes as the company’s shares have tumbled even more as speculation of an impending bankruptcy filing increased. Its financial performance has also deteriorated. In late March, it noted that preliminary results showed anywhere from a 40% to 50% decline in sales at stores opened at least a year for the quarter ended Feb. 25.
The company also said in a Securities and Exchange Commission filing in late March that it planned to sell $300 million worth of shares to avoid bankruptcy filing.
The home goods retailer had been issuing several warnings about a potential bankruptcy filing since early this year. In late January, it noted in a government filing it was in default of its loans and didn’t have the funds to repay what it owes. The company had said the default is forcing the company to look at various alternatives including restructuring its debt in bankruptcy court.
Bed Bath & Beyond joins a growing list of retailers that have filed for bankruptcy so far this year including party supplies chain Party City and David’s Bridal. The bankruptcy could offer a window of what’s to come in the retail industry, given the changing landscape and the increasing challenges in the U.S. economy.
During the depths of the pandemic, a number of retailers filed for Chapter 11 bankruptcy including Neiman Marcus and J.C. Penney. But in 2022, there was a respite in retail bankruptcy filings as shoppers, flush with government stimulus money and a pile of savings, spent with abandon, helping to lift all types of retailers. But as credit tightens and inflation remains stubborn, shoppers have been tightening their purse strings in recent months, leaving struggling retailers like Bed Bath & Beyond more vulnerable.
Bed Bath & Beyond had been trying to turn around its business and slash costs after the previous management’s new strategies worsened a sales slump. The company announced last August it would close about 150 of its namesake stores and slash its workforce by 20%. It also lined up more than $500 million of new financing.
Bed Bath & Beyond’s shares, which were trading at distressed levels, have also been on a turbulent run. It made a monstrous run from $5.77 to $23.08 in a little more than two weeks in August. The trading was reminiscent of last year’s meme-stock craze, when out-of-favor companies suddenly became darlings of smaller-pocketed investors.
But the stock fell back to Earth after Ryan Cohen, the billionaire co-founder of online pet-products retailer Chewy Inc. who purchased a nearly 10% stake in Bed Bath & Beyond last March, sold off all his shares.
Shares were hovering close to 30 cents in the past few days. A year ago, shares were trading at around $17.
Bed Bath & Beyond said it expects to process returns and exchanges in accordance with its usual policies until May 24 for items purchased prior to Sunday. It also anticipates gift cards, gift certificates and loyalty certificates will be accepted through May 8.It will stop accepting coupons on Wednesday.
AP Writer Bruce Shipkowski in Toms River, New Jersey contributed to this report.
Maritime gas prices – CTV News Atlantic
For the most part, drivers in the Maritimes are paying slightly less for gas Friday, but the cost of diesel is up.
In mainland Nova Scotia, gas is down three cents to a minimum price of 152.9 cents per litre.
In Cape Breton, motorists are now paying a minimum price of 154.8 cents per litre for regular self-serve gasoline.
Diesel increased 2.5 cents, the minimum price is now 137.7 cents per litre.
The minimum price for diesel in Cape Breton is now 139.6 cents per litre.
PRINCE EDWARD ISLAND
On Prince Edward Island, gas increased 1.1. cents, the minimum price is now 165.6 cents per litre.
Diesel on the island increased 1.5 cents, the minimum price is now 157.5 cents.
Meanwhile, in New Brunswick, gas is down 2.4 cents, the maximum price is now 164.6 cents per litre.
Diesel is up slightly to 0.6 cents, the maximum price is now 158.6 cents a litre.
NL Unemployment Rate Slightly Rises – VOCM
Statistics Canada says the unemployment rate rose to 5.2 per cent in May, marking the first increase since August 2022.
The rate for Newfoundland and Labrador rose slightly to 10.2 per cent from 10.1. In metro, the jobless rate in May hit 5 per cent, a slight increase from the 4.9 recorded in April.
The job report comes two days after the Bank of Canada raised its key interest rate by a quarter of a percentage point, citing concerns about a string of hot economic data, including low unemployment.
May jobs numbers not enough to change Bank of Canada’s course: Experts
Canada’s labour market showed minor signs of softening in May, but economists and other experts said the Bank of Canada likely wouldn’t read the numbers as a sign that its rate-tightening campaign aimed at bringing down inflation is working.
Unemployment rose to 5.2 per cent from five per cent, the first increase since last August, according to the Statistics Canada Labour Force Survey for May.
The numbers released Friday said the economy lost 17,000, though employment overall was little changed.
Randall Bartlett, senior director of Canadian economics at Desjardins, cautioned that job losses were concentrated among the youngest workers in Canada as they enter the summer jobs season, and “not necessarily characteristic of what we’re seeing in the underlying labour market.” He said the job losses can’t yet be seen as a “trend.”
“We need to see how this shakes out in the months ahead, and then we’ll decide what it means for monetary policy,” Bartlett told BNN Bloomberg in a television interview.
Dominique Lapointe with Manulife Investment Management noted “small loss” mostly among the younger age group of workers should be interpreted with caution, as seasonal adjustments can be challenging for that demographic. He also pointed out that employment rose among core-aged workers.
WHAT DOES IT MEAN FOR THE BANK OF CANADA?
The jobs numbers came days after the Bank of Canada resumed its interest rate tightening cycle, hiking its key rate by a quarter of a percentage point to 4.75 per cent after a string of unexpectedly hot economic data.
Lapointe said he is expecting another rate hike next month based on recent inflation and GDP readings. He said the jobs numbers aren’t significant enough to change the central bank’s path.
“I don’t think this morning’s (Labour Force Report) report would change what’s going to happen in July. We’d probably need to see way more weakness in other economic indicators before the next meeting for them to change their course,” he said.
Jay Zhao-Murray, FX Analyst at Monex Canada, noted that the data that went against economists’ expectations for job gains in May, but agreed that the numbers wouldn’t shift the central bank’s thinking.
“With employment cooling on the whole, this latest report does weaken the case for further hikes from the Bank of Canada, but given the details and composition of employment changes, we do not think it would materially change the Bank’s latest view on the economy,” he said in a written statement.
He said he is expecting another 25-basis-point rate hike from the Bank of Canada in July, “unless the subsequent data also confirm the negative signal from today’s report.”
Economist Tuan Nguyen of RSM Canada, meanwhile, said “there are reasons to believe that May’s decline in net jobs is not a fluke,” given that most of the job losses were in business, professional services, and trades.
Taken with an uptick in the unemployment rate, he pointed to signs that “a long-awaited softening of the labor market has finally arrived.”
“Following Friday’s job data, the Bank of Canada’s decision to hike the rate to 4.75 per cent … might be the last one in this cycle. Nevertheless, we continue to believe that rates should remain at that level at least until the end of the year to ensure substantial easing of inflation,” Nguyen said in a written statement.
Wages, which the Bank of Canada has zeroed in on as a particular concern in its inflation fight, rose 5.1 per cent year-over-year in May.
Bartlett made the case that wage growth in Canada is more “subdued” than it might appear.
He noted that StatsCan’s monthly wage reading is one of several wage indicators that the Bank of Canada looks at, and others appear to be decelerating more quickly, meaning that “wages are not the concern we had anticipated” when it comes to the possibility of a “wage-price spiral” some economists fear could push inflation higher.
Regardless, Bartlett said he expects the Bank of Canada will interpret the labour force reading as a sign that Canada’s labour market remains “very tight.”
“It needs to see the unemployment rate move meaningfully higher (and) the job vacancy rate move meaningfully lower in order to be able to see wage growth come down to a level that’s consistent with two per cent inflation,” he said.
CONSUMER SPENDING CLUES
As for the sectors where people lost jobs in May, Bartlett said the data holds clues that Canadians are still spending money despite the high-interest rate environment.
“It’s not necessarily in sectors where you would think tight monetary policy and higher interest rates would be leading to job losses,” Bartlett said.
Accommodation, food services, arts and recreation were not hit particularly hard with losses, but those are areas where people generally cut back on spending in tough economic times, Bartlett said.
“We may see the consumer continue to be relatively healthy in the second quarter, and it may be maybe pointing to that still,” he said.
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