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AP Business Case Study · Unit 3, Task 7

Bed Bath & Beyond: A Balance Sheet Running on Empty

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Unit 3 · The Balance Sheet and Net Worth

A real-company case study for Unit 3, Task 7 of AP Business with Personal Finance, written in the same format as the course's business cases. Read the case, answer each question on your own, then open the sample answers to check your thinking. Facts are current as of October 2026, and every source is listed at the bottom.

The Case

Unit & taskUnit 3, Task 7: The Balance Sheet and Net Worth
Topic3.7
Key peopleMark Tritton (CEO from November 2019 to June 2022); Sue Gove (Interim CEO after Tritton left in 2022; named permanent CEO in October 2022)
Case years2019–2025 · Evaluation case
Key questionHow did stock buybacks, shrinking cash, and liabilities that stayed high while assets fell weaken Bed Bath & Beyond’s balance sheet before its 2023 bankruptcy?
Business Canvas componentsFinance, Operations
Snapshot
  • Business: Bed Bath & Beyond Inc. — home-goods retailer (Bed Bath & Beyond, buybuy BABY, and Harmon stores)
  • Industry: Retail (home goods)
  • Founded: 1971; public company from 1992
  • Headquarters: Union, New Jersey
  • Key people: Mark Tritton (CEO 2019–2022); Sue Gove (CEO 2022–2023)
  • Ownership/Status: Filed for Chapter 11 bankruptcy on April 23, 2023; stores closed; brand name sold to Overstock.com

A Home-Goods Giant Under Pressure

Bed Bath & Beyond, a retailer of home goods, began as a private business in 1971 and became a public company in 1992. By February 2022, it ran 953 stores — 771 Bed Bath & Beyond stores, 130 buybuy BABY stores, and 52 Harmon stores — and employed about 32,000 people. But it had been losing ground for years. In December 2019, CNN reported that the chain had struggled for years to compete with traditional retailers such as Walmart and Target and with online sellers such as Amazon and Wayfair.

In November 2019, the company brought in a new CEO, Mark Tritton, a former Target executive who had helped build Target’s own store brands. His turnaround plan included launching the company’s own brands, with eight new Owned Brands introduced in fiscal 2021 alone. Sales still fell: from $11.2 billion in fiscal 2019 to $9.2 billion in fiscal 2020 and $7.9 billion in fiscal 2021. The company reported a net loss each year, including a $559.6 million loss in fiscal 2021. (Its fiscal year ended in late February or early March, so fiscal 2021 ended on February 26, 2022.)

Spending Cash to Buy Back Shares

For years, Bed Bath & Beyond used large amounts of cash to buy back its own stock from investors. From 2004 through February 2022, it spent about $11.7 billion on buybacks, and CNN later reported that the company had even taken on debt in 2014 to help pay for them. Under Tritton, the company announced a $1 billion, three-year buyback plan, then sped it up, aiming to finish two years ahead of schedule by the end of fiscal 2021. In fiscal 2021 alone, it spent about $589 million, including fees, buying back stock — more than its net loss for the year.

Cash shrank quickly. Cash and cash equivalents fell from about $1.35 billion in February 2021 to about $440 million a year later. Shareholders’ equity fell even more sharply: from $2.56 billion in March 2019 to $1.76 billion in February 2020, $1.28 billion in February 2021, and just $174 million in February 2022.

A Thin Cushion

The exhibit shows parts of the company’s balance sheet at the end of fiscal 2020 and fiscal 2021. By February 2022, total liabilities of about $4.96 billion were nearly as large as total assets of about $5.13 billion. Merchandise inventories had grown slightly, to about $1.73 billion, while cash had dropped. Besides about $1.18 billion of long-term debt, the company owed about $1.5 billion in long-term operating lease obligations. Its annual report also warned that it had faced supply chain disruptions in 2021 and expected more in 2022.

Suppliers and Lenders Pull Back

In 2022, the slide sped up. Tritton left the company in June 2022, and Sue Gove became interim CEO before being named permanent CEO in October. In August, the company announced plans to lay off about 20% of its corporate employees, close about 150 stores, and cut several of its in-house brands. In January 2023, it reported that sales for the quarter that ended November 26, 2022, had dropped more than 30% from a year earlier, to $1.25 billion. The company blamed fewer shoppers and less merchandise available to sell, and it warned that there was “substantial doubt” about its ability to continue operating.

Suppliers and lenders reacted. As the company’s finances weakened, its relationships with vendors soured, some suppliers demanded payment in advance, and its stores ran low on merchandise. The company defaulted on its credit line, and in March 2023 its lenders, which included JPMorgan and Sixth Street, cut its revolving loan from $565 million to $300 million. A stock sale in early 2023 that was expected to raise more than $1 billion brought in far less.

Bankruptcy — and a Name That Survived

On April 23, 2023, Bed Bath & Beyond filed for Chapter 11 bankruptcy in New Jersey and said it would wind down its business. At that point it still operated 360 Bed Bath & Beyond stores and 120 buybuy BABY stores. According to CNN, its most recent SEC filing showed about $5.2 billion in debt, and its stock had closed at 29 cents a share on the Friday before the filing. “The company’s stewardship of their capital failed,” said Declan Gargan, a credit analyst at S&P Global Ratings.

The stores closed, but the name lived on. In June 2023, Overstock.com won an auction for the Bed Bath & Beyond brand name and related intellectual property with a $21.5 million bid — a deal that did not include keeping any stores open. Overstock brought the name back as an online home-furnishings store. In August 2025, the first Bed Bath & Beyond Home store was set to open in Nashville, Tennessee, run by The Brand House Collective, the company formerly known as Kirkland’s.

Exhibit 1: Bed Bath & Beyond balance sheet, selected items (in millions of dollars)
ItemFeb. 27, 2021Feb. 26, 2022
Cash and cash equivalents1,353.0439.5
Merchandise inventories1,671.91,725.4
Total current assets3,620.02,363.2
Total assets6,456.95,130.6
Accounts payable986.0872.4
Total current liabilities2,294.92,074.8
Long-term debt1,190.41,179.8
Long-term operating lease liabilities1,509.81,508.0
Total liabilities5,180.04,956.4
Retained earnings10,225.39,666.1
Treasury stock (cost of shares bought back; subtracted)(11,048.3)(11,685.3)
Total shareholders’ equity1,276.9174.1

Source: Bed Bath & Beyond Inc. Form 10-K for fiscal 2021 (consolidated balance sheets), filed with the SEC. Selected items only, so the rows shown do not add up to the totals; small differences are due to rounding. Treasury stock is subtracted when calculating shareholders’ equity.

Reading Questions

These are the same for every case. They check that you caught the basics before you analyze.

1. Which business does this case feature, and what product or service does it provide?
The case features Bed Bath & Beyond Inc., a home-goods retailer that began in 1971 and went public in 1992. In February 2022, it operated 953 stores under the Bed Bath & Beyond, buybuy BABY, and Harmon names, along with online shopping, before filing for bankruptcy in April 2023.
2. Who are the key people named in the case, and what roles do they play? Which other stakeholders — individuals or groups — have an interest in the business?
Mark Tritton, a former Target executive, was CEO from November 2019 until June 2022 and led a turnaround plan built around the company’s own brands and a $1 billion stock buyback. Sue Gove served as interim CEO after Tritton left and was named permanent CEO in October 2022; she was CEO when the company filed for bankruptcy. Declan Gargan, a credit analyst at S&P Global Ratings, criticized how the company used its capital. Other stakeholders include shareholders, lenders such as JPMorgan and Sixth Street, suppliers that began demanding payment in advance, about 32,000 employees (in early 2022), customers, competitors such as Walmart, Target, Amazon, and Wayfair, Overstock.com (which won the auction for the brand name), and The Brand House Collective (which was set to open a Bed Bath & Beyond Home store in Nashville in August 2025).
3. Identify an opportunity and/or a challenge the business faces in this case.
Challenge: Sales fell from $11.2 billion in fiscal 2019 to $7.9 billion in fiscal 2021, the company reported a net loss in each of those years, and its cash dropped from about $1.35 billion to about $440 million in one year while it kept buying back stock. By 2023, suppliers wanted payment in advance, lenders cut its credit line, and it filed for bankruptcy. Opportunity: Tritton’s plan to build the company’s own brands was meant to win customers back, and the Bed Bath & Beyond name itself kept enough value that Overstock.com bid $21.5 million for it after the bankruptcy.

Practice Questions

These apply the Unit 3 concepts from Task 7 to the case, in the style of AP free-response prompts.

1. Using the exhibit, identify one current asset, one current liability, and one long-term liability on Bed Bath & Beyond’s February 26, 2022, balance sheet. Then describe how buying back its own stock affected two parts of the balance sheet.Topic 3.7 · LO 3.7.A
Current asset: cash and cash equivalents of $439.5 million (or merchandise inventories of $1,725.4 million). Current liability: accounts payable of $872.4 million, money owed to suppliers. Long-term liability: long-term debt of $1,179.8 million (or long-term operating lease liabilities of $1,508.0 million). When the company bought back stock, it paid cash, so an asset (cash) went down; at the same time, owners’ equity went down by the same amount, because the cost of the repurchased shares is recorded as treasury stock and subtracted from equity. That keeps the equation Assets = Liabilities + Owners’ equity in balance. Treasury stock grew from $11,048.3 million to $11,685.3 million in one year, which — together with a $559.6 million net loss that reduced retained earnings — helped shrink shareholders’ equity from $1,276.9 million to $174.1 million.
2. Calculate Bed Bath & Beyond’s working capital on February 27, 2021, and on February 26, 2022. Explain what the change would signal to a supplier deciding whether to keep selling to the company on 30-day credit terms.Topic 3.7 · LO 3.7.B
Working capital = current assets − current liabilities. Feb. 27, 2021: $3,620.0 million − $2,294.9 million = $1,325.1 million; Feb. 26, 2022: $2,363.2 million − $2,074.8 million = $288.4 million, a drop of about 78%. Working capital fell mainly because cash dropped by about $913.5 million while current liabilities fell only about $220.1 million, and by 2022 inventory — which must be sold before it turns into cash — made up about 73% of current assets. To a supplier, that thinner and less liquid cushion means a higher risk that the company will pay late or not at all, so the supplier might shorten its credit terms or demand payment in advance. That is what some suppliers did as the company’s finances weakened, which left stores low on merchandise, cut sales, and made the cash shortage worse.
3. Net worth equals assets minus liabilities. Calculate Bed Bath & Beyond’s net worth (owners’ equity) on February 26, 2022, using the exhibit’s totals. Then describe why individuals calculate their personal net worth, and explain one lesson this case offers a household that tracks its net worth.Topic 3.7 · LO 3.7.C
Net worth = $5,130.6 million − $4,956.4 million ≈ $174.2 million, which matches the reported shareholders’ equity of $174.1 million except for rounding. Individuals calculate personal net worth to get a snapshot of their financial health, track progress over time, qualify for loans, and plan for goals such as buying a home or retiring. One lesson is that the trend matters as much as the number: the company’s equity was still positive, but it had fallen about 86% in one year (from $1,276.9 million to $174.1 million) as losses and buybacks drained it, a warning sign that a household tracking its net worth over time would notice. A second lesson is that positive net worth is not the same as having cash: much of the company’s current assets were inventory, and a household whose wealth is tied up in a home or car can still struggle to pay its bills if it has little cash.

Discussion Questions

Talk these through with a partner or your class. There's more than one good answer, so back yours up with evidence from the case.

  1. If you had been on Bed Bath & Beyond’s board in 2021, would you have voted to speed up the $1 billion stock buyback? What else could the company have done with that cash?
  2. Which balance sheet warning sign do you think should have worried suppliers most? (a) Falling cash, (b) shrinking working capital, (c) shrinking shareholders’ equity, or (d) a large amount of inventory compared with cash. Defend your choice with evidence from the exhibit.
  3. In February 2022, the company still reported more than $9.6 billion in retained earnings but only $174 million in total shareholders’ equity. How can both be true, and what does that tell you about where its past profits went?
  4. Overstock.com bid $21.5 million for the Bed Bath & Beyond name and related intellectual property, but no stores. What kind of asset is a brand name, and why might it keep value after a company fails?
  5. Which stakeholders were hurt by the company’s bankruptcy, and how? Could any of them have seen warning signs in the balance sheet earlier?

Application Activity

A recent college graduate has $1,200 in checking, $2,500 in savings, a car worth $9,000, and a laptop worth $800. She owes $7,500 on a car loan, $24,000 in student loans, and $900 on a credit card. Build her personal balance sheet, calculate her net worth, and identify which of her assets are most liquid. Then write two or three sentences explaining whether a negative net worth is a crisis for someone in her situation and which warning signs, like the ones in the Bed Bath & Beyond case, she should watch for.

Key Takeaways

  • A balance sheet is a snapshot that must balance: Assets = Liabilities + Owners’ equity. In February 2022, Bed Bath & Beyond’s $5.13 billion of assets were matched by $4.96 billion of liabilities, leaving only $174 million of equity as a cushion.
  • Lenders and suppliers care about liquidity, not just size. The company’s working capital fell from about $1.33 billion to about $288 million in a year, and by 2023 suppliers wanted payment in advance and lenders cut its credit line.
  • Spending cash on stock buybacks lowers both assets and owners’ equity. Combined with years of losses, buybacks erased most of the company’s equity — a reminder for businesses and households alike to watch the trend in net worth and keep enough cash to pay the bills.

Use it in your Business Canvas Project

Draft a startup balance sheet for your Business Canvas Project: list the assets you will need (such as a cash reserve, equipment, and inventory) and show how each is funded — by loans (liabilities) or by your own investment (owners’ equity). Check that your current assets cover your current liabilities so you could pay suppliers on time.

For Teachers

Opening activity: Ask students to imagine a family that owns a nice house and two cars but has only $200 in the bank and a $1,500 credit card bill due this month. Is the family financially healthy? Use their answers to introduce the balance sheet as a snapshot of what someone owns and owes at one point in time, and the idea that being able to pay bills soon (liquidity) matters as much as total wealth.

Tip: “Print case” prints the case and all questions with the sample answers hidden, so it works as a student handout.

Sources

  1. Bed Bath & Beyond Inc. Annual Report (Form 10-K) for fiscal 2021 (year ended February 26, 2022), U.S. Securities and Exchange Commission (EDGAR), 2022-04
  2. Consolidated Balance Sheets (Bed Bath & Beyond Form 10-K, fiscal 2021), U.S. Securities and Exchange Commission (EDGAR financial report), 2022-04
  3. Consolidated Statements of Operations (Bed Bath & Beyond Form 10-K, fiscal 2021), U.S. Securities and Exchange Commission (EDGAR financial report), 2022-04
  4. Consolidated Statements of Shareholders’ Equity (Bed Bath & Beyond Form 10-K, fiscal 2021), U.S. Securities and Exchange Commission (EDGAR financial report), 2022-04
  5. Bed Bath & Beyond’s new CEO Mark Tritton clears out the executive suite, CNN, 2019-12-17
  6. Bed Bath & Beyond’s future is looking increasingly dire, CNN, 2023-01-05
  7. Bed Bath & Beyond files for bankruptcy protection, CNBC, 2023-04-23
  8. Bed Bath & Beyond’s stock buybacks before its bankruptcy, CNN, 2023-04-25
  9. Overstock.com wins Bed Bath & Beyond auction, CNBC, 2023-06-22
  10. Bed Bath & Beyond is back with a slightly different name and a promise to honor legacy coupons, CBS News, 2025-08-11
All Case Studies Review Unit 3 Practice Questions

This case was written for educational use from the public sources listed above. Bed Bath & Beyond did not review it and is not affiliated with this site; company names are trademarks of their owners. This resource is independent and not affiliated with or endorsed by College Board.