Bed Bath & Beyond Skips California in Expansion Over Steep Economic Barriers

August 22, 2025 – Bed Bath & Beyond, the home goods retailer attempting a comeback after its 2023 bankruptcy, has announced it will not open any physical stores in California as part of its nationwide expansion plan. The decision, revealed by Executive Chairman Marcus Lemonis on August 20, 2025, cites the state’s high taxes, fees, wages, and stringent regulations as insurmountable barriers to profitable operations. The move has sparked a public feud with California Governor Gavin Newsom, who mocked the retailer’s decision, highlighting tensions over the state’s business climate and fueling discussions about policy reform amid a growing corporate exodus.

A Strategic Retreat from California

Bed Bath & Beyond, now operating under Beyond, Inc. after its intellectual property was acquired by Overstock.com for $21.5 million in 2023, is plotting a revival with plans to open approximately 300 small-to-midsize “neighborhood” stores across the United States over the next 24 months. The retailer, in partnership with The Brand House Collective (formerly Kirkland’s), opened its first rebranded Bed Bath & Beyond Home store in Nashville on August 8, 2025, with a focus on home decor, bedroom, bathroom, and laundry products. However, California, which once hosted over 80 of the retailer’s stores, will be excluded from this brick-and-mortar expansion.

Marcus Lemonis, also CEO of Camping World, was blunt in his reasoning, stating, “This decision isn’t about politics—it’s about reality. California has created one of the most overregulated, expensive, and risky environments for businesses in America.” He pointed to high taxes, elevated fees, a $20-per-hour minimum wage in some sectors, and a complex web of regulations that he claims stifle growth, restrict hiring, and inflate costs for customers. “Even when the state announces a budget surplus, it’s built on the backs of ordinary citizens who are paying too much and businesses who are squeezed until they break,” Lemonis added in a statement posted on X. Instead of physical stores, the company will serve California customers exclusively through its e-commerce platform, BedBathandBeyond.com, offering 24- to 48-hour delivery and same-day service in some areas.

Newsom’s Sharp Response

Governor Gavin Newsom’s office responded swiftly, dismissing Bed Bath & Beyond’s announcement with sarcasm. “After their bankruptcy and closure of every store, like most Americans, we thought Bed, Bath & Beyond no longer existed,” the Governor’s Press Office posted on X. “We wish them well in their efforts to become relevant again as they try to open a 2nd store.” Newsom echoed the sentiment on his personal X account, writing, “The company that already went bankrupt and closed every store across the country two years ago? Ok.” The remarks drew criticism from conservative commentators and business advocates, who accused Newsom of downplaying legitimate concerns about California’s economic policies.

Lemonis countered Newsom’s jab with a call for pro-business reforms, proposing streamlined regulations, a balanced labor environment, litigation reform to reduce frivolous lawsuits, and a competitive tax structure. “You are a smart man and I know the post below is out of frustration,” Lemonis wrote on X, addressing Newsom directly. He emphasized that Bed Bath & Beyond has built a billion-dollar online business since acquiring the brand’s intellectual property and plans to focus on sustainable growth in less restrictive markets.

California’s Business Climate Under Scrutiny

The public spat underscores broader tensions between California’s regulatory environment and businesses seeking to operate profitably. California ranks 48th in the Tax Foundation’s 2024 State Business Tax Climate Index, ahead of only New York and New Jersey, with high corporate, sales, and individual income tax rates. The state’s minimum wage, which rose to $16.50 per hour in 2025 and $20 for fast-food workers, has been cited as a challenge for retailers, with an estimated 1,040 fast-food restaurants closing between April and September 2024 following the wage hike. Additionally, regulations such as mandatory greenhouse gas emissions reporting for large corporations have drawn criticism from executives like Lemonis, who called such laws “crazy” during a February 2025 Fox Business appearance.

Bed Bath & Beyond’s decision aligns with a broader trend of companies scaling back or leaving California entirely. High-profile firms, including Tesla, Charles Schwab, Chevron, and SpaceX, have relocated their headquarters to states like Texas, citing lower taxes, fewer regulations, and a lower cost of living. A Hoover Institution report noted that 74 corporate headquarters left California in the first half of 2021 alone, with affordability and regulatory burdens as key factors. In-N-Out Burger, a California staple, recently announced plans to expand in the Republican-led South and move its headquarters to Tennessee by 2026, with President Lynsi Snyder citing difficulties in raising a family and doing business in the state.

Support and Criticism

The standoff has drawn mixed reactions. San Jose Mayor Matt Mahan, a Democrat, called Bed Bath & Beyond’s decision “serious,” urging California to address its business climate to prevent further economic losses. “We are shooting ourselves in the foot,” Mahan posted on X, emphasizing efforts in his city to support employers. Conversely, some X users and commentators, including the conservative LibsofTikTok account, praised Lemonis for taking a stand against what they describe as California’s hostile business environment. Others, like Micah Efran of the Texas Democratic Party, questioned the retailer’s viability, noting its 2023 bankruptcy and suggesting it may struggle to open stores anywhere.

California, however, retains significant economic strengths. With a GDP of $4.7 trillion, it ranks as the world’s fourth-largest economy, surpassing Japan in 2024. The state leads in tech, entertainment, and startups, with a vast talent pool and diverse industries. Economists argue that these advantages continue to attract businesses despite the challenges. Still, the Bureau of Labor Statistics reports that more companies have left California than entered since 2015, raising concerns about a potential long-term economic impact.

A Case Study in Retail and Regulation

Bed Bath & Beyond’s decision to skip California highlights the challenges retailers face in balancing profitability with regulatory compliance in high-cost markets. While the company’s e-commerce strategy ensures California customers can still access its products, the absence of physical stores means the state will miss out on jobs, local tax revenue, and economic activity tied to retail operations. Lemonis’s outspoken criticism, coupled with Newsom’s dismissive response, has amplified calls for policy reform to address California’s reputation as a challenging business environment.

As Bed Bath & Beyond moves forward with its revival, opening stores in states with more favorable conditions, the debate over California’s economic policies is likely to persist. For now, the retailer’s absence from the Golden State serves as a case study for other businesses weighing expansion in heavily regulated markets, while Newsom’s leadership faces scrutiny amid growing concerns about a corporate exodus.