What’s going on with Bed Bath & Beyond?

Thursday’s announcement from Bed Bath & Beyond (BBBY) that it was considering bankruptcy caught shoppers and some investors by surprise, but the onetime meme-stock darling’s fall from grace has been developing for quite a while. The bigger question is, what happens next?

While bankruptcy warnings aren’t exactly uncommon for struggling companies, what made Bed Bath & Beyond’s especially noteworthy was a line in the statement: “These measures may not be successful.” 

Shares, predictably, plunged, falling roughly 30%, to a level BBBY hasn’t seen since 1993. And consumers were left with a lot of questions. Here’s where things stand at the moment.

Will Bed Bath & Beyond file for bankruptcy?

It’s pretty likely. Generally, once a company warns that bankruptcy is an option it’s considering, it becomes a self-fulfilling prophecy. Suppliers are less likely to want to work with it, knowing that such a possibility is looming, and so will hedge their interactions with the chain to protect themselves. 

Bed Bath & Beyond has said it could seek additional financing, but it has gone to that well already (getting money last summer to stay in operation through the holidays). It could also try restructuring or refinancing its debt, but most analysts are expecting a Chapter 11 filing as the most likely outcome. 

Will Bed Bath & Beyond go out of business?

That’s the bigger question, of course. Bankruptcy doesn’t mean the end of the road. Apple, General Motors, and Marvel Entertainment have all survived the process. But, historically, less than 10% of companies that file Chapter 11 have successfully bounced back. 

Management certainly didn’t raise hopes, either, with this paragraph in the statement: “While the Company continues to pursue actions and steps to improve its cash position and mitigate any potential liquidity shortfall, based on recurring losses and negative cash flow from operations for the nine months ended November 26, 2022, as well as current cash and liquidity projections, the Company has concluded that there is substantial doubt about the Company’s ability to continue as a going concern.”

Bed Bath & Beyond stock was soaring not long ago. What happened? 

Last July, BBBY shares soared 365% after a filing revealed activist investor Ryan Cohen’s RC Ventures fund was maintaining its holding in the company, with a prediction that the share price would hit $80. Cohen, founder of Chewy and chairman of another meme-stock favorite GameStop, suddenly reversed course in August, dumping his entire holdings, more than 9.4 million shares. That caused the stock to plunge—and led to calls for an SEC investigation into Cohen, which never materialized.

When will we learn more about the company’s next steps? 

Bed Bath & Beyond is scheduled to report earnings January 10. The company could announce additional moves at that time. It’s unknown whether it will take questions from analysts. 

What caused the problems at Bed Bath & Beyond?

The problems at the home-goods retailer have been multifold—among them, leadership shakeups, store closures, and the shocking suicide of a top executive. 

But the core of the problems came when Bed Bath & Beyond missed out on the wave of shoppers its competitors saw during the pandemic. That came as it was in the midst of a failed overhaul, where it was planning to rely more on private brands than on products like KitchenAid. Its website was also not as robust or user-friendly as others. Consumers bypassed its offerings, opting for convenience and familiar names.