E Bed Bath & Beyond: A Retail Tale Of The Walking Dead

Bed Bath & Beyond is in greater trouble than the slight sales decline and greater earnings decline may be exhibiting to date. Keep in mind that most every bit of sales growth is coming from acquisitions, the opening of new stores and digital sales. None of these variables is a long-term solution to growth, but mere band-aids sourced to stem the glaring metric declines. The Walking Dead activities the company engages in are akin to a cat chasing its tail; they are acts of futility. 

A great portion of Bed Bath & Beyond’s business comes from soft goods and soft goods will always find the greatest portion of sales considered through brick and mortar storefronts. There is a total addressable market (TAM) for online sales of soft goods that will better understood in the years to come. But what can be logically deduced as to why soft goods are not purchased at the same rate as hard goods through online channels is that consumers like to touch and feel soft goods. Presently, like Bed Bath & Beyond’s online sales, soft good online sales are growing off of a very small base. It’s for these reasons, Bed Bath & Beyond’s online efforts/push can’t move the needle for the company and could be described as futile. Would the retailer be better off dedicating its capital to adjusting its assortment of goods in stores while amending its store footprints and concept? I think it’s safe to suggest the company has acknowledged its store concept is challenged and is taking baby steps toward adjusting its concept with its shopping venue “Beyond at Liberty View”, located in the Sunset Park community within Brooklyn.With approximately 120,000 ft.², this is a unique shopping destination that includes Bed Bath & Beyond, buy-buy BABY, Cost Plus World Market, and Face Values, all under one roof.

The problem with Beyond at Liberty View is that it took roughly 2 years to develop and the retail landscape for such duplications of this concept are limited in North America.In a sense, Bed Bath & Beyond spent a lot of time and money to develop another concept it simply can’t scale fast enough or without a drag on total business profitability. 

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Disclosure: I am short UVXY/TVIX.

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