Bed Bath & Beyond Is Still a Junk Company

As retail investors drive the shares of some small companies, particularly retailers, in wild gyrations, one thing that is obvious is that some of these public corporations continue to have horrible prospects for the future. AMC Entertainment’s stock nearly doubled one day. It is still too early to say whether people will return to theaters or stick with their pandemic habit of streaming. In any case, AMC is still in trouble. GameStop, another retail investor darling, has too many stores and only a modest e-commerce business. However, a company with the worst prospects but whose shares have spiked higher is Bed Bath & Beyond Inc. (NASDAQ: BBBY).

Bed Bath & Beyond has been dying for several years. Other large retailers have similar merchandise. Its most recent financial statements told the story of how difficult a situation it is in. Even so, its shares rose 62% to just over $44 Wednesday.

In its most recent quarter, which ended February 27, revenue dropped 16% to $2.6 billion. It swung from a loss of $65 million last year to a tiny profit of $9 million.

The worst of it was that comparable-store sales fell 20%. Digital growth was 86%, but that cannot salvage a retailer with 1,020 locations. Bed Bath & Beyond still has too many stores, and management is faced with a brick-and-mortar problem it is not entirely addressed.

If all goes well at Bed Bath & Beyond this year, it may have total revenue of $11 billion or so. It could make the most modest of profits. That should be weighed against its current market capitalization of $4.7 billion.

Bed Bath & Beyond remains on the ropes, and it might not even be a retailer that survives the shakeout of an industry turning to e-commerce at a dizzying pace.

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