Bed Bath & Beyond operates hundreds of retail stores in Kentucky and across the country, but they have an uncertain future. Brick-and-mortar retailers have faced several challenges in recent years, but the most damaging has been the surging popularity of online stores like Amazon. Radio Shack, Sears, Pier 1 Imports and Linens ‘n Things have all filed for bankruptcy in recent years, and many experts believe that Bed Bath & Beyond could be next major retailer to close its doors.
Turnaround strategy
Falling sales and dwindling profits prompted Bed Bath & Beyond to pursue a ruthless cost-cutting strategy in 2022. A new CEO was appointed in June, and a turnaround plan was unveiled in August. Details of the plan included phasing out private labels, closing 150 retail locations and laying off 20% of the company’s supply chain and corporate workers. Executives hope that the strategy will arrest the retailer’s decline and stave off a business bankruptcy, but third-quarter sales and profit figures released on Jan. 10 suggest that this is unlikely.
Dismal figures
Bed Bath & Beyond prepared investors for bad news with a somber set of projections released the day before its third-quarter results were announced, but the actual figures were even more dismal. Year-over-year losses rose by 42% to $393 million, which means the retailer lost more than a billion dollars during the first nine months of the fiscal year. Losses like these have made creditors reluctant to provide Bed Bath & Beyond with the funds it needs to pay its workers and purchase inventory, which has made bankruptcy all but inevitable according to several financial experts.
New paradigms
Brick-and-mortar retailers like Bed Bath & Beyond are struggling to cope with a changing economy. Consumer habits are evolving, and the trend toward online shopping is unlikely to slow down. As an example, digital imaging has replaced traditional film, and streaming services have put video rental stores out of business. Companies that are unable to adapt to new paradigms live on borrowed time, and the numbers suggest that time is fast running out for Bed Bath & Beyond.