Bed Bath & Beyond $1 Stock Collapse

Bed Bath & Beyond Inc. (NASDAQ: BBBY) should no longer be in business but still is. Its stock trades below $1 a share and should trade at zero. (Here are 25 brands customers are abandoning.)

Shockingly, Hudson Bay Capital Management will put $100 million into the company. When the price dropped below, it did not have to. According to The Wall Street Journal, it reset the price at which the deal could be done from $1.25. The transaction is part of a larger funding round, the newspaper reports: “The lower threshold will allow the company to collect an additional $100 million by selling equity warrants to Hudson Bay and other investors, bringing the total amount Bed Bath & Beyond has raised since last month to $460 million.:

What do these financiers see in Bed Bath & Beyond? It is anyone’s guess. Presumably, they think sales will rebound, or at least the bottom line will. The company has shuttered stores and reduced other costs. However, it ran into inventory problems over the holidays due to payment problems, which should have undermined any recovery in revenue. January and February are not supposed to be good months for most retailers.

In its most recently reported quarter, the retailer’s results were dismal. Revenue dropped 32% to $1.3 billion. The net loss was $392 million for the period. Sue Gove, the CEO, said, “At the beginning of the third quarter, we initiated a turnaround plan anchored on serving our loyal customers, following a period when our merchandise and strategy had veered away from their preferences.” Hard to do that through a series of layoffs and with fewer stores.

Morale at Bed Bath & Beyond has to be terrible, which, again, makes a turnaround difficult. With more stores closed, the retail footprint has gotten smaller, which makes it hard for some customers to get to locations.

Bed Bath & Beyond is dead. So, why does the money keep coming?

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