Recently, Loop Capital analyst Anthony Chukumba said that bankruptcy may be the best path out of Bed Bath & Beyond’s trouble. Could this be true? The current retail landscape and the retailer’s atrocious results support the argument. Investors should prepare for getting a tiny return as Bed Bath & Beyond becomes a penny stock or loses share value completely.
The Motley Fool wrote that it may be “too hard to swim against the tide of worsening economic conditions, a deteriorating financial position, and a management team not up to the task of salvaging the business.”
Bed Bath & Beyond is far smaller than retail giant Target, but it shares some of the same problems. Inventory management in the current environment is extremely difficult. Target’s stock was hit recently as it downgraded its forecast for the second time in a month.
Retail stocks could be gutted again if the holiday season is weak. The revenue from this period is usually critical to the fortunes of retailers. Consumer confidence in the United States is low, and forecasts of a recession grow by the day. Bed Bath & Beyond’s customers will continue to disappear.
The retailer’s problems are not new. Its stock has underperformed the market for almost all of the past five years. In that time, it is off 76%. The S&P 500 is up 71% over the same period.
Bed Bath & Beyond certainly does not have more time to prove itself than until the end of the year, when holiday results show how difficult the road has been.
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