Bed Bath & Beyond Is The Next Sears

Bed Bath & Beyond has recently fallen apart like a cheap watch. Same store sales have dropped by double digits. The retailers have posted large losses. Recently, it ran low on cash. A small group of investors and the Bed Bath management believe it can be turned around. This is extremely unlikely. The mega store has started to look like Sears and JCPenney in their final days.

Recently, the deep Bed Bath problems showed up in its most recent earnings release. Same store sales fell 26%. Revenue fell 25% to $1.46 billion. Bed Bath lost $358 million. At the same time, the board kicked out President and CEO Mark Tritton who was brought in to turn around the company. Board member Sue Gove was appointed interim CEO.

Among Bed Baths’s trouble was that suppliers were concerned that if they delivered inventory they would not be paid.

Fast forward two months from the earnings release and Bed Bath said it had received financing to renew its cash coffers. Part of this was a revolving credit line. The second was a “first in, last out” facility.

Bed Bath further said it would close 150 stores. The company has 769 Bed Bath stores across the 50 states, DC, Puerto Rico and Canada.

Deeply troubled retailers usually use the same game book. They cut the stores with the worst performance. At the same time, people, who once could go to a Bed Bath store in their area, no longer can. The smaller footprint has substantial risks. JCPenney used this playbook as did Sears. In each case, the store footprint shrunk down close to nothing.

Bed Bath’s shares have taken a horrible beating this year, with the stock down over 40%. The price will go lower, very possibly on its way to zero.

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