Yahoo Finance Live anchors discuss Bed Bath & Beyond stock performance.
- Here are three things you need to know right now. Bed Bath shares are cratering this morning after the company said it would close 150 stores, can 20% of its workforce, speaking about of jobs there, and raise $500 million to survive through to the holiday season. The stock had seen a rally in August, as retail investors renew their interest in the meme stock craze.
Brad, so much to get to on what is now one of the hottest tickers on the Yahoo Finance platform. I was just on. We were just on the Bed Bath and Beyond earnings call. New interim CEO go Sue Gove walking through how she's going to turn the company around, just fascinating, companies raising a large slug of cash.
But I think the overall tone is here, look at those interim results provided at the bottom of this company's press release, same-store sales down 26%, these interim results far worse than the already awful, ugly, terrible results that were reported in late June. So that's first. Second, no signs that they're going to spin off this Buy Buy Baby division.
They put two new leaders, one new leader in here to lead Bed Bath and Beyond, the brand, one leader to lead the Buy Buy Baby brand, so no sale of that brand here. I think the market wanted to see it, but overall, another dismal quarter for Bed Bath and Beyond at a time they don't need dismal. They need good. They need signs that of life that something can get better.
- Yeah, and they talked specifically about right sizing their cost structure through some of the fleet optimization workforce reductions that you mentioned as well and just a number to put on that, liquidity in the financial commitments that they've mentioned, more than $500 million.
And then additionally, they're working towards some of the sustainable improvements towards their balance sheet and cash flows, all this really rounding out to really give us this sense of how investors, regardless of whether it's a retail investor or someone who's on the institutional side and continuing to evaluate Bed Bath and Beyond, and exactly where some of these measures, even if it is more liquidity that they need to take on in order to enact the ability to just grow out the business or to sustain some type of customer base that they can then continue to build on those sales and revenue for.
As of right now, it's really coming down to the executive leadership. And I think they really outline that in some of the changes that they were making in the organizational structure on the call too.
- Yeah, and in addition to this, they also outline the potential sale of 12 million shares. So of course, that is doing its part to weigh on the stock. You mentioned leadership. There are now three female leaders running Bed Bath and Beyond. So in this regard, a hat tip to Sue Gove for making those leadership changes. It is good to see that.
Realistically, you now have a CEO race to ultimately replace Gove at some point, probably within the next 12 months. If either one of these new executives at Bed Bath and Beyond or Buy Buy Baby turn either one of those brands around, the problem is does somebody else? Does another retailer pick them off? We are watching the next round of retail talent emerge at this company. And if they do a good job, perhaps they go lead another company and try to save their fortunes.
But bottom line is this, everything we have talked about here at Yahoo Finance, Brad, in the past year with these meme stocks, be careful what you wish for. We saw Bed Bath and Beyond shares talked up aggressively in Reddit throughout August on hope that this day the company will come out and save the company. And it just shows, I think, a basic lack of understanding by some of these investors what happens when a company is struggling.
You're seeing Bed Bath raise cash, sell stock, tell you things are really, really bad fundamentally. Those aren't positive things. Those are not things that should be rewarded with a higher stock price. They should be rewarded with a lower stock price. And that's what you're seeing here this morning.
- Yeah, and one of the other red flags as well, just to add on to that, the store footprint that they're highlighting right now and how they actually need to look across, reducing and kind of eliminating some of these unnecessary layers. if you've been in a Bed Bath and Beyond store at any point in your life, you know the stores are massive. What's happening right now across retail is the trimming of some of that in-store experience, if you will, and really the reduction of the overhead that you need to operate on.
And so when you walk in the Bed Bath and Beyond, sure, it's easy to be overwhelmed by just the sheer size of the store. And back in the day, that was a good thing. Back in the day, you want to walk into the store and feel like you could get anything you need from there. But now it's more of this streamlined approach that a Bed Bath Beyond is going to have to look at.
What does that square footage look like that you need to operate so that you're actually seeing a profit on each square footage of that store? And so that's going to be so key, even as they make some of these changes, regardless of the number of stores, what the actual totality of space that you're operating with those stores is and how you're actually seeing products and inventory churn, actually be enacted here.
- Absolutely. One tiny thing I'll mention this. There looks like they're going to hold an event for vendors. To me, that takes me back to what I saw at the Great Recession, when you have a bank executive go on TV and tell you everything is fine while their stock is crashing 50%. The fact that they're now meeting with vendors at a special event tells you that there are a lot of concerned vendors about, that supply to Bed Bath and Beyond, whether they will, in fact, get paid for or holiday merchandise. That, the fact they're having that, may just be a major red flag.