It’s been a tumultuous week for Bed Bath & Beyond Inc., as the struggling company avoided bankruptcy in what was described as an “unusual” stock offering.
Home improvement retailer and meme stock phenomenon is also expanding its store closing efforts. Tuesday, Bed Bath & Beyond BBBY,
announced “an eventual operational goal” of 360 stores across the United States, plus approximately 120 Buybuy Baby stores. The company said its digital channel is also expected to account for a larger percentage of sales.
As of November 22, 2022, the company had a total of 949 stores, including 762 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada; 137 Buybuy Baby stores; and 50 stores with the Harmon, Harmon Face Values or Face Values names.
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So, what’s next for the embattled company?
“I still don’t believe this turnaround plan will ever have a rosy future,” Eric Schiffer, chief executive officer and president of private equity firm Patriarch Organization, told MarketWatch.
Schiffer estimates the store closures will impact “north of $1 billion” on Bed Bath & Beyond sales, while “nourishing” competitors such as Walmart Inc. WMT,
Related: Bed Bath & Beyond’s lifeline comes at ‘incredible cost’ to shareholders, analyst warns
Wedbush analyst Seth Basham is also skeptical of Bed Bath & Beyond’s turnaround potential. “We see a low probability that the company will meet its 2023 turnaround plan,” he said, in a statement released Wednesday.
Bed Bath & Beyond’s proposed moves aim to generate additional cash, satisfy the company’s defaulted loans and interest payments, and most importantly buy it more time, according to the analyst.
Despite this week’s stock offering, bankruptcy is still on the horizon for Bed Bath & Beyond, according to KeyBanc Capital Markets analyst Bradley Thomas.
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“Although the offering avoided what was reportedly an imminent bankruptcy (bringing in $225 million), we believe BBBY’s fundamentals and cash burn rate (of $400 million in the most recent quarter) still make it look like a failure the most likely outcome in the end,” he wrote.
Shares of Bed Bath & Beyond jumped 92% on Monday in a move that wiped out other shares of memes AMC Entertainment Holdings Inc. AMC,
and GameStop Corp. GME,
before pulling back.
Shares of the home improvement retailer are down 85% in the past 12 months, hitting a 52-week low of $1.27 on Jan. 6. The S&P 500 SPX index,
it fell 7.6% over the same period.
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Of the 11 analysts polled by FactSet, two have a hold rating and nine have an underweight or sell rating for Bed Bath & Beyond.