Bed Bath & Beyond posts weak holiday quarter earnings as bankruptcy looms

Yahoo Finance Live anchors discuss the rise in stock for Bed Bath & Beyond following third-quarter earnings.

video transcript


We’re about 25 minutes to the start of the opening bell, and we’re tracking this ticker very closely in the pre-market, BBBY, Bed Bath & Beyond. The struggling Bed Bath & Beyond released its long-awaited holiday quarter results this morning, painting a not-so-pretty picture for investors. Net sales, they crashed 33% year over year, and its comp sales plunged 34%. Brian, I saw you already churned out an article. You got that up on the website here this morning with a few things that investors should be paying.

It’s my Super Bowl, Brad. Bed Bath Beyond earnings. It takes me back to when I covered Sears.

You have a lot of these Super Bowls, I noticed.

I do. You know what, Julie? Every day is a Super Bowl for me. Every day. I get excited about something every single day. But wouldn’t go– I know IT’s 7 stats we had. And if you go to the “Yahoo Finance” home page, you will see the stats laid out at the top. But I want to zoom in on this.

This company had a 10-minute earnings call this morning. Sue Gove led that call this morning. No analyst questions, really, because there are no analysts left that are covering this company. But inventory, she did note that they are still having problems getting inventory into the stores. What is that doing? That is leaving the shelves bare.

And if you look at the company’s cash flow statements. Last year, over the past nine months I should say they have spent almost $300 million on inventory to keep things in their almost 1,000 store count. Now, they only exited the quarter with $153 million in cash. So they’re going to need cash very soon if they’re going to want to keep anything on these shelves.

And it’s unclear. I know Gove said that they’re working on potential options in a, quote, “timely manner,” but where are those options? Something needs to be done because we are now at the point where Bed Bath may not even be able to open its doors to any customers that do show up.

Yeah, the options right now that they had laid out, at least within this release– and this comes after the business update, that had, in more dire terms, really pointed out what could happen next. And the business could, essentially, cease to exist, or at least in the near term have to explore the option of bankruptcy as well.

And I did a Control F for bankruptcy the second that this dropped, and you didn’t really see a mention outside of what was just in some of their disclosures at the bottom of that. But within this as well, they’re going to continue with some of the incremental cost reductions. About $80 million to $100 million across corporate, including overhead expenses, head count, really to try and get the business to align better with where they are right now.

One of the other things I noticed, in midst all of the options that the company has talked about, not just now, but in past years, was a sale or spin-off of Bye Bye Baby, which had been a better performer within the organization. But it said that comp sales were down in the low 20% range.


So that is not better. You pointed out to us last night that Babies R Us is going to be revived in the American Dream mall.

Talk about a well-timed press release from that team over there in the now empty American Dream mall.

But for that matter, there’s just so– whether you’re talking about Bed Bath & Beyond itself or Bye Bye Baby, there was always a lot of competition for this space, and Bed Bath & Beyond actually held up much better. I mean, I actually thought it was so interesting to hear our Didti Thomas talk about what appealed to her about Bed Bath & Beyond in the past, and what stopped appealing to her during the pandemic. They just stopped having the stuff that she wanted to buy, right? They had a lot of out of stocks, and it never quite got its groove back. And the customers are just not coming back.

That gets the essence of the outlook for this company, and that is there is none. This company– and I think I’ve said this before, and you hit the nail on the head, Julie, they stand for nothing. In this marketplace, you can get a Keurig coffee maker. You can roll up to Target and get that.

And you can get a full-on refurbish your home with stuff that looks cooler than anything in Bed Bath & Beyond store. And then, secondarily, you can get it all at lower prices. This store worked 20 years ago when there was nothing like this in the marketplace. And I don’t care what Sue says on this 10-minute earnings call. There is no turnaround. The stores are just too big. They don’t stand for anything. There’s nothing differentiating them versus things online. The company will unlikely be around within five years.

Well, customers are doing more evaluation in terms of the value experience that they have in purchasing. And then, additionally, in the quality of the product that they’re getting from any retailer right now. And if you have a decrease in that value appreciation from customers, then they’re going to look for some of those alternatives, as you said.

And we’re going to hear from some of the banks over the course of this week and next week about how they’re seeing customers engage with their own spending habits. And I think what Matt Maley told us yesterday, from Miller Tabak, was extremely telling because there’s not just a demand problem.

It’s actually the fact that demand is highly reactive to the lowering of prices right now. And so, he basically just summed it up, saying that everybody is saying demand is fine, but it’s not. Demand is fine because they’re lowering prices. And so, demand isn’t fine in that essence as well.

And you nailed it too, Brad, as well. Why is the stock up? You’re wondering why is Bed Bath shares up when a company lost this much amount of money. No mention of that one single word, bankruptcy. So there’s hope I think in this meme stock community, and I’m seeing it just in the tweets that I’m getting, that they will not file for bankruptcy. That’s not the case. Just because they didn’t mention it, like they did a week ago, doesn’t mean a bankruptcy is off the table. We could be sitting here in a week or two and talking about a filing from them.

Right. It just seems to me and it’s not happening today.

That’s it.


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