[News Inside Companies] 'Meme Stocks' Also Useless... BB&B Ultimately Files for Bankruptcy

Established in 1971 with a store opening in New York suburbs
Rapid growth amid 1980s home decorating boom
Poor performance and financial difficulties due to lack of online adaptation

“Seohak Ants” have been paying attention to Bed Bath & Beyond (BB&B), a household goods company that was known as a representative “meme stock” in the U.S. stock market, but it has filed for bankruptcy protection due to financial difficulties. Meme stocks refer to stocks that attract individual investors through word of mouth online.

According to foreign media including Bloomberg on the 25th, BB&B filed for bankruptcy on the 22nd (local time) at the U.S. Bankruptcy Court in Newark, New Jersey. All 360 BB&B stores and 120 “Buy Buy Baby” retail stores are scheduled to close. The private equity firm Sixth Street Partners provided a $240 million loan to allow BB&B to continue operating during the liquidation period.

BB&B gained popularity as a meme stock among young investors. As the stock price fell below $1 due to management difficulties, bargain buying surged. Additionally, when Ryan Cohen, founder of the pet retail company “Chewy,” which is supported by individual investors, acquired a large stake in BB&B, the stock price soared to the $30 range. However, after Cohen sold all his shares in August last year, the stock price continued to decline. The closing price on the 21st was only 29 cents.

BB&B store, a U.S. household goods retail chain.
[Image source=Yonhap News]

BB&B was co-founded by Warren Eisenberg and Leonard Feinstein in 1971 when they opened two Bed and Bath stores in the suburbs of New York. They established the company based on the idea that there would be a need for stores specializing only in household goods in the early 1970s.

At the time of its founding, the company operated on a small scale mainly around New York and New Jersey. In the mid-1980s, as department stores began selling household goods and a boom in decorating homes for leisure at home occurred, the company grew dramatically. Products related to bedrooms and bathrooms, as well as kitchenware and simple interior accessories like photo frames, became very popular. Later, in 1992, the company went public and had over 700 stores in 44 U.S. states.

The strategy BB&B adopted at the time was to allow customers to purchase all the household items they needed in one store. At BB&B, products related to bedrooms and bathrooms were available in various colors, brands, and price ranges. One-stop shopping was possible for dinnerware sets, glassware, and more. Also, all decision-making authority was given to store managers rather than headquarters, encouraging product assortments tailored to local markets to maximize sales growth.

However, there is analysis that the company ultimately went bankrupt because it failed to properly respond to the online market. It is also pointed out that increasing its own private label product lines significantly during the pandemic, when supply chains were disrupted, made corporate management difficult. As a result, factories temporarily closed, delivery delays surged, and costs rose, making it difficult for retailers to supply products to BB&B stores in a timely manner. Consequently, consumers who felt inconvenienced began turning to various online markets such as Amazon.

According to court documents cited by Bloomberg, as of the end of November last year, BB&B’s assets were estimated at $4.4 billion (about 5.8 trillion won), and liabilities at $5.2 billion. Bloomberg reported, “BB&B’s creditors number between 25,001 and 50,000,” and “BNY Mellon holds the largest amount of unsecured bonds at $1.18 billion.”

Previously, BB&B implemented self-help measures such as selling its shares, but having suffered from poor performance and financial difficulties in recent years, BB&B was notified of default by JPMorgan Chase earlier this year for failing to pay interest on its debt.

This content was produced with the assistance of AI translation services.