To disguise the embarrassingly empty shelves at one Bed Bath & Beyond store over the busy holiday shopping season, a 22-year-old employee took to draping banners over them. Other real estate was left sparse after shipments of KitchenAid mixers, kitchen gadgets and curtain rods stopped coming in. An odd overabundance of Ugg comforters filled some parts of the store.
Inventory simply wasn’t showing up like normal. While the store, located in the Midwest, received some 400 cartons of inventory five times a week during the 2021 holiday season, shipments slowed dramatically to 100 cartons two or three times a week in 2022. Permanently missing from those boxes were customer favorites, like Wamsutta sheets.
“Foot traffic started fairly heavy, but it tapered off tremendously,” said the employee, who asked not to be identified because she still works for the retailer. Customers frequently complained about not being able to find certain products, so she often attempted to order the product for them online and was frustrated by a glitchy website.
“People don’t like ordering things but stock is so low in stores that it was part of my dialogue with nine out of ten customers,” she said.
It was an ugly holiday for Bed Bath & Beyond, which is considering filing for bankruptcy after it said high out-of-stock levels and dwindling foot traffic were expected to cause sales to drop 32% in its latest quarter. The red ink is mounting, too, with the retailer projecting that a quarterly loss of $386 million.
“During a period of elevated activity as consumers ramped up spending for Black Friday and the holidays, this is a completely unsatisfactory outcome that saps any remaining confidence that the business can turn itself around,” said Neil Saunders, managing director of GlobalData, a research firm.
While Bed Bath & Beyond was once known for stores bursting at the seams with a seemingly endless array of items, ranging from pillows and bath mats to blenders, sound machines and shower organizers, many stores have been left bare in recent months. Out-of-stock levels ran at 44% and 46% in November and December, respectively, according to DataWeave, a retail data and pricing analytics firm.
The retailer had difficulty paying suppliers on time last year, prompting some of them to stop sending shipments. In September, the company held a summit to reassure suppliers, address concerns and persuade them to continue providing them with inventory.
Bed Bath & Beyond CEO Sue Gove blamed reduced credit limits for why it wasn’t able to sufficiently stock stores over the holidays with the items that customers expected. She said the retailer was working quickly to purchase inventory and restock shelves, using revenue from the holiday period.
“We have seen trends improve when in-stock levels have increased,” she said in a statement.
It may be too late. Foot traffic to the stores has declined sharply, falling 23% from the prior year in October, the most recent data available, according to Placer.ai. There was not a month last year where it was up from 2021.
The retailer has struggled to turn itself around after it ousted chief executive Mark Tritton last year, who had alienated shoppers by replacing national brands with private label merchandise. Supply chain snarls also contributed to popular products missing from store shelves. The company’s chief financial officer died by suicide in September, days after the company announced a round of layoffs, store closures and new financing. It was also swept up in meme stock mania, with billionaire investor Ryan Cohen taking a nearly 10% stake last year, only to dump it months later.
On a Reddit message board, employees commiserated about the number of shoppers who ask when the store is closing or if the company is going bankrupt. Some commented about how they miss spending their shifts organizing and stocking inventory, rather than trying to make their stores look full or helping shoppers order out-of-stock items online.
They wonder whether the retailer has seen its last holiday season. “We won’t be around for much longer so have a backup plan,” suggested one employee.