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History of Bed Bath and Beyond in six minutes

Updated: Apr 25, 2023

On April 23 2023, the chain store Bed Bath and Beyond finally announced its decision to file for bankruptcy and closing of all stores. This certainly marked the end of a chapter for many people’s landscape of American.

What did you feel about the bankruptcy of Bed bath and beyond?

Bed Bath and Beyond was formed in 1971 and was called Bed and Bath. It is a big box retailer of home essentials, including bed accessories and kitchen tools. It was founded by Warren Eisenberg and Leo Feinstein in 1971. For many decades, the store is a happy destiny of many shoppers. The secret sauce, as stated by the founders, is the following.

• Bed and bath textiles were a destination purchase, but housewares drove the regular traffic needed to make the business work.

The founders left the board in 2019, after actions by activist share holders. We will talk about that later. In 2023, the company finally closes due to reduction of profit, even after aggressively closing of many stores to save costs

Both founders worked at Arlans, an American discount store chain. Arlan’s reached its peak when Bedn bath was formed. Arlan's opened its 50th store in in 1965. At this point, the chain had $174 million in revenue, and stores in 18 states from Maine to Colorado. It also owned 18 locations of a toy store called Play World. The chain peaked in size at 119 stores in 1970, by which time the company began experiencing heavy operating losses. The losses would later be attributed, in part, to an expansion strategy that was too geographically diverse for the chain's size, leading to inefficient distribution

The company Bed Bath Beyond would continue to fight with its competitors, including Linens n things, and pacific linen. Lenin’s and things essentially closed physical operations in 2000 and become an ecommercse store only. This is perhaps spurred due to the closing of Pacific Linen in 1999.

Here is the history of stock prices, from the original IPO in 1992. In 2011 it has 1040 stores.

Signs of bad management surfaced in 2019. Activist shareholders did not like the acquisition of Buy Buy baby and Chef Central, both stores founded by the children of Bed Bath and Beyond. Buy buy baby was acquired for 67 million dollars of cash, including 19 million dollars of debt. Chef Central is an experience store and was acquired for 1 million dollars in 2017.

The big-box chain – once considered a so-called “category killer” in home and bath goods. For long time, the store chain did not have products with its own brand. This clearly was a source of declining profit when you carry brands for others. For example, candles were priced for 30 dollars for 2, a clear rip off by the brand seller. However, establishing own brand takes time and money. The chain has seen its fortunes falter after an attempt to sell more of its own-brand goods.

The company, which had for decades used coupon mailers and other promotional discounting tactics to attract consumers, announced in April 2019 that it would reduce its use of promotional coupons and tighten restrictions on their use. To combat declining profitability, Bed Bath & Beyond also announced it was creating private label brands and opening "lab stores" that focused on home decor, food and drink, and health and beauty products. Apparently these are too little, too late.

A side note about Buy Buy Baby it acquired. The store was formed 1996 and acquired in 2007. The founders were Richard and Jeffrey Feinstein, sons of Bed Bath and Beyond.

The chief competitor was Baby R’ Us, which closed in 2018 with Toys R’ Us bankruptcy.

Clearly the 3 year pandemic from 2020-2023 hurt the store tremendously and accelerated its decline. There are a lot of turmoil. For example, In January 2021, Bed Bath & Beyond announced that they would stop selling MyPillow, citing poor sales.

• In March 2022, former CEO of Chewy, Ryan Cohen, sent an open letter, to the Board of Directors calling for Buy Buy Baby to be sold or spun off at a favorable valuation.

• On September 2, 2022, Bed Bath & Beyond chief financial officer committed suicide.

Finally it happened on April 23, 2023, after failure to pay off stock, declining sales, high debt, and years of struggling, Bed Bath & Beyond officially filed for Chapter 11 bankruptcy protection in the United States.

As a loyal shopper, I am sorry to see the store go. As a student of business, there are some lessons to be learned. No stores can clearly replace its loss of an experience. Oh well, what can entrepreneurs learn?.

• Corporate life cycle is unavoidable, despite the best efforts.

• Expansion often drives decline. Once you are hitched on the stock market, your expansion is no longer elective.

• Failure to turn around company before it hits the wall.

With this, I hope you like this short video. Thank you.

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