Bed Bath & Beyond Chapter 11 Bankruptcy Avoidance

Bed Bath & Beyond has announced the closure of more than 140 additional stores, including all stores in the Harmon health and beauty chain. In its last earnings call, it hinted that it was considering bankruptcy.

The story of Bed Bath & Beyond’s downfall has been a decade in the making. Morningstar retail analyst Jaime Katz said it’s all about speed.

“When you buy from Bed Bath & Beyond, you’re basically buying the same product that you would buy from Amazon or Target,” says Katz.

She said it was too late for the company to pivot to online shopping. So the customer has moved to another location. As a result, BB&B sat in many stores with many staff and got stuck with many things. These costs make the business even more loss-making. As such, we are closing stores and selling brands to recover cash. But Katz explained that there aren’t many runways left.

“It gives them the cash to exist a little longer, but it doesn’t really change the underlying problem,” Katz said.

The problem lies in its business model, which is hard to fix while landlords, suppliers and creditors are strangling.

“Everybody wants their cut and they fear they won’t get it right now,” says Kevin Kaiser, a professor of finance at the Wharton School of the University of Pennsylvania. They will tear the company apart when they line up and take their share of what they owe.”

This is why Kaiser thinks bankruptcy is likely. But that doesn’t mean liquidation is. Retailers such as Aeropostale and J. Crew survived Chapter 11.. The company needs to become its own brand and create value beyond the blue 20% off coupon.

“We call them addictive drugs,” Basham joked.

The coupon also appeared on the company’s media website. Bed Bath and Beyond says it continues to research its store footprint and is working with advisers on “multiple passes.”