US-based retailer Bed Bath & Beyond will be exiting its Canadian operations and closing all stores following court filings last week. A significant amount of retail space will be left vacant across the country with the shuttering of 54 Bed Bath & Beyond stores as well as 11 of the company’s buybuy BABY locations.
This follows turmoil for its US parent company — last week Bed Bath & Beyond’s US division managed to raise cash to stave off a bankruptcy. Canada isn’t so lucky with the Canadian division being declared insolvent. Alvarez & Marsal will help wind down the Canadian store operations in the coming weeks which is expected to include clearance sales prior to stores shutting for good.
As of this month, Bed Bath & Beyond had almost 390 full-time Canadian employees and 1,038 part-time workers according to the court filing.
The Canadian arm, Bed Bath & Beyond Canada Ltd., was granted an initial order for creditor protection by the Ontario Superior Court of Justice on Friday under CCAA, with a net loss of $99.5 million for the nine months ending November 26, 2022.
Retail Insider was recently asked by some landlords if Bed Bath & Beyond’s Canadian stores were expected to stay open even as the US division floundered — court filings in Canada now show that even though some stores were profitable, the overall Canadian division created significant negative adjusted earnings margins to the parent company.
Stores are quite large, averaging over 30,000 square feet each. Bed Bath & Beyond’s first store in Canada opened in December of 2007 at the Bayview Glen Shopping Centre in Richmond Hill, Ontario, in a 34,000 square foot space.
A decade ago, Bed Bath & Beyond was a much more successful retailer in Canada when it launched its baby-focused buybuy BABY concept in Canada. Its first store opened in Edmonton December of 2014 and the company now has 11 of these stores in Canada, also set to close.
Bed Bath & Beyond’s real estate strategy in Canada involved opening big-box stores in a mix of shopping centres, strip malls and big-box centres. Some stores are located near major shopping centres such as in Calgary, where Bed Bath & Beyond has a location across from CF Chinook Centre. Landlords with properties occupied by Bed Bath & Beyond will have to re-tenant these retail spaces, presenting both challenges and opportunities to add new more robust retailers to the mix.
It’s not known exactly how much space Bed Bath & Beyond and buybuy BABY occupy in Canada. Over the weekend, one broker Retail Insider spoke with estimated the number to be about 2-million square feet. Given that stores are typically in the 30,000 square foot range, they will be easier to back-fill compared to vacancies left by Target and Sears Canada when those retailers shuttered several years ago.
Existing boxes where Bed Bath & Beyond stores are located could be demised for multiple tenants, or could be filled with larger single tenants depending on what makes sense. Single tenants such as a grocery store, a fitness studio, or entertainment concept could replace some Bed Bath & Beyond stores. Possible individual tenants such as Winners/Marshalls, Staples, Sport Chek, Indigo, Nordstrom Rack, Old Navy, The Brick, Leons, and London Drugs could move in depending on the opportunity and what makes sense depending on the location.