Bed Bath & Beyond’s suppliers started to get spooked and began demanding payment upfront. That led to in-stock levels around 70 percent during the past holiday season, according to Ms. Gove, who became permanent chief executive in October.
In early January, Bed Bath & Beyond warned investors that bankruptcy was a possible option. On Jan. 26, it said it had defaulted on its debt payments.
It started laying off workers and closing stores. It quickly liquidated its Harmon beauty and health chain, which it had owned since 2002.
In early February, it sidestepped bankruptcy after coming up with a plan to use a public stock offering to raise more than $1 billion. The plan, backed by Hudson Bay Capital Management, was only good so long as Bed Bath & Beyond’s stock stayed above a $1 dollar a share. Earlier this month, Bed Bath & Beyond canceled that deal after its terms were breached. Its stock closed at 29 cents a share on Friday.
All the while, sales at the retailer continued to fall, starving the company of the cash — and confidence — necessary to keep suppliers shipping to its stores.
“It’s a death spiral,” Neil Saunders, the managing director at GlobalData’s retail division, said. “If you can’t get the stock, you can’t make the sales. If you can’t make the sales, your credit deteriorates. If your credit deteriorates, people are less willing to supply you. That cycle seems impossible to break.”