Most retail experts believe Bed Bath & Beyond has one foot in a grave, and a visit to a couple of locations indicate a retailer under severe stress amid elevated discounting and slow-moving inventory.
After a failed push in 2021 and most of 2022 into stocking stores with private label goods no one had heard of while also closing stores and firing workers, Bed Bath & Beyond's future now hangs in the balance. The company ended its most recent quarter with a little more than $100 million in cash, tanking sales, weak store traffic, and a badly damaged brand.
There is an interim CEO running the business, which came about after the booting of the well-intentioned former top Target exec Mark Tritton.
"We also doubt a new ABL [asset-backed loan] would make Bed Bath & Beyond's vendors — who we continue to worry could place the company in a death spiral by demanding more onerous payment terms — any more comfortable about Bed Bath & Beyond's near and long-term prospects," Bed Bath & Beyond critic and Loop Capital analyst Anthony Chukumba said in a scathing note last week.
Chukumba slapped the stock with a $1 price target (current stock price: $12.95. He told Yahoo Finance Live several months ago the company is likely to go out of business.
Yahoo Finance visited two Bed Bath & Beyond stores in Long Island, New York to get a sense on how dire a shape the retailer is in just months from all-important holiday shopping season.
This Bed Bath & Beyond in Bohemia, NY has a remodeled exterior, an ode to when the company believed in a bright future and had more cash to undertake snazzy remodels.
The parking lot was nearly empty. And in a potential sign of things to come, the store is only yards away from a former Kmart and Borders.
The store was overrun with sale signs as the company tries to quickly clear inventory to convert it to cash.
There were plentiful discounts on Bed Bath & Beyond's relatively new private label brands, which fell flat among core shoppers who have long embraced brand name merchandise. When those popular items were removed, consumers ordered elsewhere. (Bed Bath is now trying to restore some brand name merchandise.)
Most private label sections — despite the sales signs — were devoid of traffic. Here is one of those brands dubbed "Our Table." Bed Bath & Beyond may need deeper discounts if the retailer wants to move this stuff and raise the cash it needs ahead of the holidays.
An entire section devoted to clearance items isn't usually a great indication for the health of a retailer. The bedding in the white bin in front of the clearance section also had its price slashed.
The section was also a mess, with merchandise just tossed haphazardly on the shelves.
The discounts in the clearance section — especially for a name brand product such as "Lush Decor" — were shocking.
The window treatments below are on offer for a 79% discount.
These snazzy motivational signs were 80% off in the clearance department.
"Haven" is another new private label brand at Bed Bath & Beyond. Here you see towels — already a relatively cheap purchase — at 50% off. When you can't sell cheap towels at full price, it says a lot about product quality and how consumers view a brand.
The other Bed Bath & Beyond store we visited was in West Babylon, NY. It, too, has the newer exterior look for the brand.
The store was also not super crowded on a sunny weekend afternoon.
It's often a red flag as an analyst when you are hit with an entirely empty department at a struggling retailer as soon as you walk into a retail store. It usually shows a lack of attention to detail by employees or challenges in getting merchandise for some reason.
Here, there should be plenty of back-to-college items. We didn't snap a picture while the shelves were being reset — there were no workers in sight. We saw a few similar empty shelves at the Bohemia store.
This is a classic missed sales opportunities for a company that can't afford to do that.
Another newish private label brand for Bed Bath & Beyond "Studio 3B" being discounted: decorative rugs at 50% off.
Another Bed Bath & Beyond store with an entire messy clearance department.
More deep discounts in the clearance department. Here a 14 piece bedding set at 50% off, and yet it's still sitting on the rack.
This is not normal.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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