Bankrupt Bed Bath & Beyond to Vacate Stores by June

Article originally posted on Globe St. on April 24, 2023

This weekend Bed Bath & Beyond filed for bankruptcy protection, a long-awaited event that retail landlords have been preparing for for months.

The retailer’s 360 Bed Bath & Beyond and 120 Buy Buy Baby stores and websites will remain open and continue serving customers as it “begins its efforts to effectuate the closure of its retail locations,” it said in a filing.

It plans to begin liquidating the stores immediately, though the company also said it’s also searching for a buyer for some or all of its assets. Bed Bath & Beyond expects all sales to be completed and the properties vacated by June 30.

The retailer’s demise has been a long time in coming and unlike other big box stores, cannot be attributed to the rise of e-commerce eroding its sales. There are a myriad of reasons why it has faltered but Forbes traces its failure to 2019 when activist investors won control of its board “and hired a CEO who heedlessly forced the private-label strategy he devised for Target on BBBY customers.”

At any rate by January it announced more than $500 million in new financing, job cysts and the closure of almost 100 stores, which followed 150 closures in 2022. It continued to survive, trying to find additional sources of capital and even received a last-minute lifeline from Hudson Bay Capital Management. But the deal fell through when Bed Bath & Beyond couldn’t reach the stock-price minimums.

The retail real estate community is fortunate in that Bed Bath & Beyond’s bankruptcy and store closures is probably one of the most-telegraphed failures in recent times.

In March for example, Green Street reported that a Bed Bath & Beyond bankruptcy – which was just theoretical at that point – “threatens to break the recent upward trend in strip center occupancy.” However, it also noted that a backlog of retailers with signed leases set to commence soon should soften the blow of potential tenant fallout.

To be sure, landlords have been scrambling over the past several months to line up potential tenants to fill the vacancies if Bed Bath & Beyond closes, the Wall Street Journal reported in January. It cited an unnamed source who said that one of the bigger Bed Bath & Beyond landlords has received commitments from tenants to fill all 12 locations if and when they close, including Sephora, Trader Joe’s, Dick’s Sporting Goods, T.J. Maxx, Ross Stores and HomeGoods.

One factor working in these landlords’ favor, the WSJ noted, is that Bed Bath & Beyond outlets are typically located in dominant shopping centers in the suburbs, where retail has performed particularly well since the pandemic.

Indeed, retail has been performing well over the last few years with more stores opening than closing. Vacancy rates are at historic lows and the newly vacant Bed Bath & Beyond stores are presumably an opportunity for both space-starved tenants and landlords who will be able to raise rents for their new occupants.

“A lot of great real estate is going to come available into a market where there’s been no vacancies,” Brandon Isner, the head of retail research at CBRE, told CNN less than a month ago, referring to the most recent wave of Bed Bath & Beyond closures before its bankruptcy.

It will not take long for retailers to occupy those spaces.”