Bed Bath & Beyond Inc. (NASDAQ: BBBY) received new financing, cut 20% of its workforce and closed 150 stores. It won’t help. People do not want what the domestics retailer has to sell.
Based on a pro forma analysis, Bed Bath & Beyond’s available capital went from $500 million to $1 billion. For those who put in the money, never give a sucker an even break. Somehow, smart money believes that cutting costs will solve the retailer’s problems. The company did as most dying retailers do. It plans to cut its way to profitability. The solution is to kick out workers and chop stores that do not perform well. Based on its financial reports, one has to wonder about the performance of what is left.
Bed Bath & Beyond does not even have a real chief executive officer. It has not found one. Sue Gove, the interim CEO, made the restructuring decisions after a very short time on the job.
Two other plans involve making a stronger bond with customers and reducing the number of items Bed Bath sells. Usually, a decline in available items also cuts store traffic. Maybe Bed Bath & Beyond is the exception.
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Additionally, the company said it would improve relationships with vendors. All vendors want is to be paid.
Finally, Bed Bath & Beyond handed out a Q2 interim update that showed a drop of comparable store sales of 26%, a figure almost no retailer in history has overcome.
Bed Bath & Beyond now faces the holiday season, which is a make-or-break period for most retailer profits. Unless it has a surge in sales, which is highly unlikely, it cannot stay open next year.
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