Bed Bath & Beyond stock on track for worst week ever, based on records going back to 1992

By Ciara Linnane

Troubled retailer is expected to file for bankruptcy within weeks

Bed Bath & Beyond Inc. stock tumbled another 18% on Friday to bring its weekly losses to 45%, after a report that the company plans to file for bankruptcy protection within weeks.

The stock (BBBY) is suffering its worst week ever, according to Dow Jones data, based on records going back to 1992. The S&P 500 is up 1% this week.

The report in the Wall Street Journal came after a business update, in which the troubled housing goods retailer forecast weaker sales for the quarter that ran partly through the holiday shopping season, citing “lower customer traffic and reduced levels of inventory.” The update included “going concern” language, suggesting the business may not survive its current woes.

Bed Bath & Beyond, when reached for comment, said it was “working with strategic advisers to evaluate all paths to regain market share and enhance liquidity.” However, it said it had made no determinations yet on the matter, and declined to comment directly on the Journal report.

Already bearish analysts weighed in on the news with fresh gloom. Guggenheim said it was terminating coverage of the stock, while Raymond James reiterated its underperform rating and UBS slashed its stock price target to $1.50 from $3.50.

“Overall, the update highlighted that Bed Bath & Beyond continues to struggle to improve its top-line performance,” said Raymond James analysts led by Bobby Griffin in a note to clients.

“As such, bottom line results remain pressured and the company continues to have significant cash burn.”

Bed Bath & Beyond’s problems are well documented and the bankruptcy threat is just the latest chapter in a downward spiral. The company has been hit hard by competition in the home goods sector from giants such as Amazon, Walmart and Target, as well as dollar stores, off-price retailers and even big grocers.

In September the retailer and sometime meme stock darling reported a much wider-than-expected second-quarter loss, which at the time prompted Wells Fargo’s to describe the company’s results as “indefensible.”

Bed Bath & Beyond also had to contend with leadership change, set against the backdrop of a tough business environment. In June, Mark Tritton was ousted as Bed Bath & Beyond’s CEO after less than three years in the role. Tritton’s attempts to breathe new life into the ailing company were hampered by supply-chain disruptions, labor shortages, inflation and the COVID-19 pandemic, according to Carol Spieckerman, president of retail advisory firm Spieckerman Retail.

For more, see: Bed Bath & Beyond bankruptcy warning marks latest chapter in troubled retailer’s downward spiral

Bed Bath & Beyond has also been struck by tragedy. In August 2022 the company’s chief financial officer, Gustavo Arnal, jumped to his death from a New York skyscraper.

See: What can we expect from meme stocks AMC, GameStop and Bed Bath & Beyond in 2023?

“Even with a move back towards more branded products, we struggled to see a path for improved performance, especially with discretionary consumer spending and housing slowing further in 2023,” said Griffin from Raymond James.

“Furthermore, the ongoing cash burn and need to preserve cash/liquidity will limit in-store investments, likely only further preventing customer traffic and the brand perception with younger consumers (a key issue for BBBY, in our view).”

The company will report fiscal third-quarter earnings on Jan. 10.

Additional reporting by James Rogers and Bill Peters

-Ciara Linnane


(END) Dow Jones Newswires

01-06-23 1218ET

Copyright (c) 2023 Dow Jones & Company, Inc.

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