Call it an opinion, or a judgment call. Bed Bath & Beyond Inc. (NASDAQ: BBBY) will be out of business soon. It is low on cash, its sales have cratered and its last real chance to get financing has ended. (Here are 25 brands that customers have abandoned.)
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According to The Wall Street Journal, “Bed Bath & Beyond Inc. said it will try to sell up to $300 million of common stock in the open market while terminating a fundraising deal with hedge fund Hudson Bay Capital Management LP.” The deal was somewhat dependent on Bed Bath & Beyond’s revenue being above a specific level. It has dropped well below that.
So, Bed Bath & Beyond can go to the equities markets, where investors already face a bankruptcy that could drop the value of the stock to zero. With its stock at $0.57 and a market cap of $69 million, the chance it can raise $300 million borders on impossible. It could easily drive the stock price to below $0.20.
Bed Bath & Beyond has been on deathwatch for more than a year. Quarter over quarter, revenue and same-store sales have dropped by over 20%. It has drawn down cash at a frightening pace, and it has closed stores and cut people.
Bed Bath & Beyond also had an inventory problem, particularly during the critical holiday period. Suppliers either had not been paid or were worried they would not be.
The company’s collapse is as ugly as those of J.C. Penney, Sears and Kmart. Each was in limbo for months, and sometimes years, as management frantically tried to bring in new customers, who eventually began to go elsewhere.
It would be easy to blame the Bed Bath & Beyond implosion on Walmart or Amazon, which have played a role in the demise of other retailers. That would be too simple. Bed Bath & Beyond turned out to be its own worst enemy. It made mistakes with inventory selection and with its choices of management.
Now, it is too late to fix any of those mistakes, and Bed Bath & Beyond is on its way to the retail graveyard. There it faces the need to fire all its employees and go through a liquidation.
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