It started with a tweet—or an "X" post, if we’re being technical—and ended up as a national flashpoint for the "California is failing" debate. Honestly, it was a bit weird to watch. You have a governor of the fourth-largest economy in the world trading barbs with a home goods retailer that, let’s be real, most of us thought had already vanished into the retail graveyard.
But this wasn't just about towels and 20% off coupons.
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The Gavin Newsom Bed Bath & Beyond saga is basically a case study in how political PR and corporate frustration collide. In August 2025, the brand—now under new ownership after its 2023 bankruptcy—announced it was opening 300 new stores across the country. One major exception? California.
Marcus Lemonis, the Executive Chairman of the "new" Bed Bath & Beyond (and the guy you probably recognize from The Profit), didn't mince words. He called the state's business environment "overregulated, expensive, and risky."
Naturally, Newsom didn’t take that lying down.
The Snark Heard ‘Round the Internet
When Lemonis announced that California was getting snubbed because of high taxes, fees, and "unsustainable wages," Newsom’s office fired back with a level of sass usually reserved for reality TV.
"The company that already went bankrupt and closed every store across the country two years ago? Ok," Newsom posted.
His press office went even further, basically saying they thought the brand was already dead and wishing them luck on "trying to become relevant again." It was a classic Newsom move—dismissive, sharp, and designed to frame the company as the problem, not the state’s policies.
But behind the snark, there's a serious question: Is Bed Bath & Beyond right about California, or is Newsom right that they’re just a struggling brand looking for a scapegoat?
Breaking Down the "California Snub"
To understand the beef, you have to look at what's actually happening on the ground. Lemonis’s argument isn’t new. He pointed to a few specific "realities" that made physical stores in the Golden State a bad investment for the rebranded company:
- Labor Costs: California’s minimum wage and labor laws are among the strictest in the nation.
- Retail Theft: While the state has passed new laws like Proposition 36 to get tougher on shoplifting, the "viral" nature of retail crime remains a massive headache for big-box stores.
- Regulatory Friction: Basically, it’s just harder to get permits and stay compliant in CA than it is in, say, Tennessee (where they opened their first new "Home" store).
Instead of brick-and-mortar shops, the company decided to focus on a 24-to-48-hour delivery model specifically for Californians. They’re essentially saying, "We want your money, but we don't want your overhead."
Why the Newsom Reaction Rubbed People the Wrong Way
If you talk to business owners in the Inland Empire or the Central Valley, Newsom’s "Ok" didn't exactly land well. Critics, including San Jose Mayor Matt Mahan, have pointed out that California has some of the highest unemployment rates in the country.
When a major employer says they are skipping your state, the "standard" move for a governor is usually to pick up the phone and ask, "How can we make this work?" Instead, Newsom went for the jugular.
It’s a high-risk strategy. By mocking the brand's past failure, he’s gambling that voters will see Bed Bath & Beyond as a "loser" company rather than a symptom of a larger exodus. And he’s not entirely wrong about their history. The original Bed Bath & Beyond didn't die because of California; it died because of a mountain of debt, bad inventory management, and an inability to compete with Amazon.
The Overstock Factor
Here is the nuance people often miss: The Bed Bath & Beyond of 2026 isn't the same company that went bankrupt. The intellectual property was bought by Overstock (now Beyond Inc.).
So, when Newsom says, "You went bankrupt," he’s technically talking to a new group of owners who bought the name out of the wreckage. It's like blaming a new homeowner for the previous owner's foreclosed mortgage.
Is California Actually Losing Retail?
The Gavin Newsom Bed Bath & Beyond drama is a microcosm of a much bigger trend. We've seen Target close stores citing theft. We've seen In-N-Out—a California icon—expand its headquarters to Tennessee because it's "not easy" to do business in the state anymore.
However, California's economy is weirdly resilient. For every Bed Bath & Beyond that leaves, there are tech firms and green energy startups fighting for space. The state still has 12% of the U.S. population. You can't just ignore that market forever.
What’s happening is a shift. We’re seeing a "hollowing out" of the middle-tier retail. High-end luxury is doing fine. Extreme discount stores are doing fine. But that middle ground—the place where you’d buy a $40 toaster or a set of 400-thread-count sheets—is getting squeezed by the high cost of physical storefronts.
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The Reality of the "Beyond" Strategy
What’s the actual takeaway for you, the consumer? Honestly, not much changes for your shopping habits, but it says a lot about where the state is headed.
Bed Bath & Beyond is trying a "California Strategy" that relies entirely on e-commerce. They’re betting that they can keep their California revenue without paying California property taxes or dealing with the state's liability laws. If this works, other retailers might follow suit. Imagine a future where your favorite big-box stores are just warehouses in Nevada or Arizona that ship to you in 24 hours, while the local storefronts sit empty.
That’s the "ugly trend" that finance professors and local mayors are worried about.
Actionable Insights for the Business-Minded
If you're watching this play out and wondering what it means for the future of retail or the California economy, keep these things in mind:
1. Watch the "Store-to-Warehouse" Pivot
The Bed Bath & Beyond model—snubbing physical stores in high-cost states while maintaining a digital presence—is a blueprint. If you’re an investor, look at companies that are reducing their physical footprint in CA, NY, and IL in favor of robust logistics hubs in the "Sun Belt."
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2. Don't Ignore the Politics
Whether you love Newsom or can't stand him, his "clapping back" at CEOs shows that California isn't planning on lowering its regulatory guard anytime soon. If you're starting a business, you have to bake those "California costs" into your model from day one. You can't expect the state to meet you halfway.
3. The Return of the Ticker
Interestingly, Bed Bath & Beyond reclaimed the BBBY ticker. This shows they aren't just a "dead" brand—they are trying to leverage meme-stock energy and nostalgia to fuel this comeback. Whether that works without a presence in the country's most populous state remains to be seen.
4. Local Impact Matters
Empty storefronts are a "broken window" for local economies. If you live in a city seeing these closures, pay attention to local zoning changes. Many cities are starting to allow these old retail spaces to be converted into housing or mixed-use "experience" hubs because the old big-box model is clearly struggling.
At the end of the day, the feud between a governor and a towel store is mostly theater. But the underlying reasons—the costs, the crime, and the digital shift—are as real as it gets. California is a filter. If your margins are thin, you might not make it through.
Next Steps to Stay Ahead:
- Check your local commercial real estate trends to see if "retail flight" is hitting your specific neighborhood.
- Monitor the performance of Beyond Inc. (the parent company) over the next two fiscal quarters to see if their "non-California" brick-and-mortar strategy actually improves their bottom line compared to their competitors.
- Review the impact of Proposition 36 on retail theft rates over the next year to see if the "risky environment" Lemonis mentioned actually begins to stabilize.