Topline
Shares of struggling brick-and-mortar retailer Bed Bath & Beyond crashed to a new multi-decade low on Thursday after the company warned of persistent economic challenges plaguing efforts to turnaround its business—further piling onto abysmal losses for a stock that more than tripled amid retail-trading mayhem during the pandemic.
The firm, once coveted by retail traders, is exploring options including restructuring and … [+]
Key Facts
Bed Bath & Beyond stock crashed nearly 20% in pre-market trading Thursday to $1.98—pushing shares down to lows last seen almost 30 years ago.
Sparking the sudden downturn, the ailing New Jersey-based retailer announced Thursday morning it expects sales to collapse 33% to less than $1.3 billion in the latest quarter as a result of lower customer traffic and reduced levels of inventory.
In a statement, CEO Sue Gove blamed “inventory constraints” and “economic challenges,” including reduced credit limits that barred the firm from purchasing more merchandise, for the worse-than-expected performance.
The company also warned recurring losses in its latest quarters have contributed to “substantial doubt about the company’s ability to continue,” further stating it is exploring actions including restructuring, debt refinancing, selling assets and even filing for bankruptcy relief.
“These measures may not be successful,” cautioned the firm, which expects to post a loss of about $385.8 million in its upcoming earnings report.
Key Background
As customers turned to online shopping, Bed Bath & Beyond, which has struggled to build a strong digital presence, became one of the worst-hit brick-and-mortar retailers of the past decade. However, shares of the firm began to surge early last year, at one point more than tripling as retail traders plowed into heavily shorted stocks. The frenzy cooled off but once again intensified when billionaire Ryan Cohen, who has led an as-of-yet unsuccessful bid to turn around fellow retailer GameStop, disclosed a $120 million investment in the home goods store. That fervor, too, was short-lived, with Cohen cashing out his stake in August.
Surprising Fact
Shares of Bed Bath & Beyond have collapsed 94% from a closing high of about $35 in January 2021. However, that pales in comparison to losses since the firm’s heyday in 2014, when shares peaked at more than $80. Fellow meme stock GameStop has collapsed about 80% since its peak nearly two years ago.
Further Reading
After 28% Drop In Revenue, Bed Bath & Beyond Stock Needs A Markdown (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2023/01/05/bed-bath–beyond-stock-crashes-amid-substantial-doubt-business-can-continue/