Bed Bath & Beyond Dying
Adding to the long list of problems that will take Bed Bath & Beyond under, Bloomberg reports that some suppliers have stopped shipping products to the retailer. They do not trust the company’s balance sheet to be strong enough for them to get paid for inventory. It is the last in a series of problems that will ruin the retailer.
Bloomberg also reported that some suppliers had not been paid since the summer. Others claim the money Bed Bath raised recently was used to pay bills that were in arrears. This means it has little money left to pay for the inventory it needs for the holidays. Strong holiday sales are the only thing that will keep Bed Bath afloat, and those sales are in severe jeopardy.
The inventory problem may not matter because other problems will cause the retailer’s demise. Sue Grove, the interim CEO, has decided to take the job permanently. She could find that permanently may be a few months. She has worked in retail before, but even the CEO of Walmart could not fix Bed Bath & Beyond’s troubles.
The company has closed over 18% of its stores and laid off hundreds of people. Is it any wonder? The retailer’s financial results are in shambles. Revenue dropped 28% in the most recently reported quarter to $1.4 billion. This is a worse slide than the one at J.C. Penney before it disintegrated. Bed Bath & Beyond lost $366 million. The retailer said same-store sales would drop 20% for the fiscal year. Perhaps it will close enough stores to mitigate that.
Grove said at the time of the release, “Our results for the second quarter came in as previously expected and announced. While our sales and profit results do not yet reflect the strategic and financial actions we have initiated to change our performance, they do demonstrate sequential progress in several key areas.” What must a lack of progress look like if she calls this progress?
The company’s stock has entered penny stock territory recently. It is down 70% this year to $4. Wall Street has completely abandoned the chances of recovery.
Among Bed Bath & Beyond’s problems is its shrinking store count. While this may save a modest sum, for the time being, a smaller store count means some consumers will find it harder to find a store close to them. The inconvenience has helped ruin other retailers, like Sears and Kmart.
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Like Sears and Kmart, Bed Bath & Beyond won’t survive.
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