Down 76%, Is Bed Bath & Beyond Finally a Buy?
With its stock down a jaw-dropping 77% year to date, Bed Bath & Beyond (NASDAQ: BBBY) has seen some of the worst that the 2022 bear market has had to offer. But unfortunately for investors, the embattled brick-and-mortar retailer isn't out of the woods yet. With a weak competitive moat and deteriorating financials, the downside could be just getting started.
Founded in 1971, Bed Bath & Beyond is a retail store focused on home goods and decor. It set itself apart with its niche focus and massive assortment of products. But while this strategy seems to have worked for over four decades, the company didn't keep up with evolving consumer tastes -- especially as e-commerce rivals like Amazon offer more selection with the convenience of rapid home delivery.
Bed Bath & Beyond's second-quarter earnings report highlight the effects of these challenges. Net sales fell 28% year over year to $1.4 billion, while operating losses spiraled from $84.1 million to $346.2 million -- an increase of more than threefold. Bed Bath & Beyond's balance sheet is also weakening, with long-term debt jumping 47% to $1.73 billion (compared to just $135.3 million in cash). The high leverage could present a risk of bankruptcy if the company can't stem its cash burn over the long term.
Source Fool.com
