Bed Bath & Beyond sees an increase in its “meme-stock” — but is it too little, too late? | Retail sector

BEd Bath & Beyond, a leading home goods retailer, appears headed for bankruptcy. But you wouldn’t necessarily know that by visiting its flagship store in New York’s Chelsea neighborhood — or by looking at its share price this week.

In the past year, Bed Bath & Beyond has been one of the so-called “meme stocks,” including Gamestop, a sick video game retailer, and cinema chain AMC, whose share prices have been skyrocketed by a new generation of online traders.

This week, BB&B is on the rise again, with its share price doubling over the week amid speculation on online stock forums, including redditthat it might be a potential takeover target.

The company’s Chelsea store appears to be a better performer than most, busy with shoppers browsing the aisles but with many deeply discounted items.

However, some shoppers were uncertain about the company’s future. “It’s a great store, but in other locations, there are almost no products on the shelves,” said Chintan Patel.

He said he followed Bed Bath & Beyond during its existential crisis. “It was a 100 percent pump-and-dump process initiated by the management,” Patel said. Another shopper said the company had “kind of screwed itself up”.

Indeed, it seems unlikely that Chelsea shoppers, or meme stock traders, can save Bed Bath & Beyond now.

The company said last week that it could enter Chapter 11 bankruptcy within weeks, and has doubts it can continue to operate after a quarter of big losses and declining sales, which caused its stock to drop more than 30%. Even the rally this week — which brought its shares nearly $5 — has left the share price down 68% for the year.

On Tuesday, the company reported a loss of about $400 million. In October, more than 40% of the retailer’s products were out of stock, double the level recorded in the first half of the year, as suppliers pulled out.

“A third of revenue has vanished, plunging an already beleaguered company into the depths of chaos,” said Neil Saunders, managing director of GlobalData.

However, Bed Bath & Beyond is a bizarre tale of the power and destruction of the Internet. While Wall Street analysts think Amazon, Wal-Mart and others will eat away at the retail business, shares of the company soared in a flurry of enthusiasm last year after billionaire Ryan Cohen, founder of online pet food company Chewy, bought more than 7 million shares in the company.

Online investors capped off after r/wallstreetbets forum on Cohen’s Reddit as “The meme king who will rule for 1000 yearsand stacked.

Whether investors actually thought Bed Bath & Beyond was a solid business, or just saw an opportunity to increase the price and then sell, is an open question.

Other major MEM stocks that online traders used to punish hedge funds and other investors who were betting against them also crashed. GameStop shares are down 70% since January 2022, and AMC shares are down 82% over the same period.

Last August, the party ended when Cohen announced plans to sell his 9.8% stake in the company, making him $178 million, sparking sell-offs among followers of the stock meme and allegations of a pump-and-dump scheme. A month later, the former chief financial officer of Bed Bath & Beyond, Gustavo Arnal, died after jumping from a luxury skyscraper in Manhattan.

By then, the retailer’s stock had lost more than 70% of its value in the year, and the company said it was looking to turn things around with a strong holiday season.

But attempts to streamline its product line have been complicated by pandemic bottlenecks, a lack of online investment, and the frustration of consumers who have suddenly returned to in-person shopping only to find deficient selections.

Unlike many retailers, Bed Bath & Beyond has not been typical of retailers collapsing under competition from online retailers like Amazon. At its peak in 2013, BB&B was valued at $17 billion. A company that hasn’t added debt to its balance sheet in two decades has taken on $1.5 billion in debt as online shoppers go.

In August, the company took on more debt, after post-pandemic shoppers failed to make it. This week, the retailer was valued close to $550 million.

“Multiple paths are being explored, and we are defining our next steps accurately and in a timely manner,” CEO Susan Goff, who launched a turnaround plan four months ago, he said in a statement.

But if, or when Bed Bath & Beyond sought bankruptcy protection, many will regret its demise. The chain was founded in 1971 by Leonard Feinstein and Warren Eisenberg, who opened their first store in Springfield, New Jersey, called Bed & Bath. By 1987, as the department store fad caught on, Bed n’ Bath expanded out of state, added more products and the “Beyond” tag to its name, and became a killer classic. It went public in 1992, and had sales of over $1 billion six years later.

As shoppers perused the aisles on Tuesday, many speculated that the days of shopping at the store were numbered. Standing on Sixth Avenue, Michael Fechetti said he didn’t buy into Bed Bath & Beyond’s stock increase in 2021 and wasn’t buying it now.

“I don’t think the market will necessarily allow these hypermarkets to continue to exist,” he said. “I think they’re just going online. We’ve seen a lot of other supermarket retailers go this way.”

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