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Bed Bath & Beyond Struggles to Keep Stores Stocked for Black Friday and the Holiday Season

The home-goods retailer is attempting to reverse a steep sales slide. The company has been trying to patch up relationships with suppliers by catching up on overdue payments and recently hosted a meeting with top vendors to plead for their continued support.

November 24, 2022
10 minutes
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Bed Bath & Beyond Inc. (BBBY) is a leading retailer of home furnishings and housewares. The company operates more than 1,000 stores across the United States and Canada. Bed Bath & Beyond offers a wide variety of products, including bedding, bath towels, kitchenware, and home decor. The company also operates a website, bedbathandbeyond.com, which offers a convenient way for customers to shop online.

Target is preparing for what could be a critical holiday season, as it works to keep its stores stocked and regain customer confidence.

According to DataWeave Inc., an analytics company that tracked online availability of 150,000 items, more than 40% of the retailer’s products were out of stock in October. This is nearly twice the level it was in the first half of the year, DataWeave said.

Jesse Acosta was recently browsing Bed Bath & Beyond's website looking for closet organizers, slippers, a bathrobe and candles. "Every time I clicked on something, it was out of stock," said Mr. Acosta, 38 years old, who lives in Homestead, Fla.Mr. Acosta said that he was disappointed with the selection on the website, as everything he clicked on was out of stock. He is 38 years old and lives in Homestead, Florida.

The home-goods retailer is attempting to reverse a steep sales slide. The company has been trying to patch up relationships with suppliers by catching up on overdue payments and recently hosted a meeting with top vendors to plead for their continued support.

"We've faced some challenges in the past, but I believe we're in a good position to repair our relationships," Bed Bath & Beyond Chief Executive Sue Gove said last month. "Our accounts payable are as clean as they've ever been."

Some suppliers have said that they are still owed money by the retailer, and have paused shipments until they receive payment. Some of the invoices date back to January, according to these sources.

According to sources, Bed Bath & Beyond buyers submit a priority list of vendors to the accounts-payable department each week, suggesting that the retailer is picking which suppliers to pay based on necessity. This could mean that the company is facing financial difficulties and is struggling to keep up with its payments.

A Bed Bath & Beyond spokeswoman said the company is continuing to bolster its financing as it tries to turn around its business. The company is working with suppliers to ensure customers have access to a compelling assortment of brands, she said.

Dennis Cantalupo, the chief executive of Pulse Ratings, an independent credit-rating firm, said that this is a very important holiday season for them. He noted that they are facing a lot of obstacles.

The company is still grappling with empty shelves, even as other retailers have largely moved past the supply-chain issues of the last two years. The Covid-19 pandemic caused temporary factory closures and created shipping bottlenecks, which the company is still trying to recover from.

According to DataWeave, Bed Bath & Beyond had higher out-of-stock rates in October on comparable items than other retailers, including Lowe’s Cos., Home Depot Inc., Kohl’s Corp. and Wayfair Inc.

Bed Bath & Beyond was once one of Bonnie Quintanilla's go-to places for Black Friday deals on kitchen appliances, bedding and holiday gifts. But not anymore. Ms. Quintanilla, a 64-year-old glass artist, recently visited a store near her home in Westlake Village, Calif., and was disappointed with the selection of storage bins and comforters.

Ms. Quintanilla said that the store didn't have any of the storage bins she needed and that the shelves were fairly empty. She said that they only had one brand of comforter - UGG. Ms. Quintanilla said that the store used to have so much more variety.

Mark Tritton, former Chief Executive, tried to overhaul Bed Bath & Beyond by replacing name-brand goods with private-label items. This is a strategy that has been successful for other retailers in the past. However, it backfired at Bed Bath & Beyond, partly because the company lacked the infrastructure to design, manufacture, and ship its house brands. Once the private-label brands arrived in stores, they were not well-received by shoppers.

Bed Bath & Beyond is now changing its strategy. In August, it said it was discontinuing three of its nine private-label brands and reducing the assortment of the others. It is now trying to add more goods from national brands such as Calphalon and OXO.

Meagan Hopper, 36, of Huntington Beach, Calf., tried to buy the water-treatment additive for her Venta humidifier, but it was out of stock—as were all Venta products on Bed Bath & Beyond’s website. Ms. Hopper said she was frustrated with the retailer and ended up buying the item at a local supermarket instead.

Some national brands that were pushed aside to make room for Bed Bath & Beyond’s private-label goods said they are reluctant to increase production for the retailer, because they are uncertain about its financial position. These brands are concerned that Bed Bath & Beyond may not be able to continue to support their products, and they don’t want to increase production only to have to cut it back again later.

Earlier this year, Bed Bath & Beyond was in danger of running out of cash, and had to raise emergency funds, including more than $500 million in August. It is now in the process of swapping debt for equity, in order to help extend maturities and reduce interest expenses. It has also closed underperforming stores and laid off staff, in order to cut costs.

Since June, a number of senior executives have left the company, including its chief operating officer, chief stores officer and chief merchandising officer. Its chief financial officer died in September. Some of those positions have been filled by promoting existing employees, but the company’s ranks continue to thin. Earlier this month, Bed Bath & Beyond notified suppliers that two of its senior merchants are leaving the company, according to a memo reviewed by The Wall Street Journal.

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