Dividends and Bed Bath & Beyond files for bankruptcy

When a company goes national, one of its attributes is the goodwill it brings to the chain. People see it and eventually some will be semi-regular buyers. If you travel from your hometown, eventually you will see the chain and you will think it is doing well. During the past few years, companies that were in standalone or big box store were in trouble because the government was encouraging people not to go shopping. There was hope when things returned to semi normal or even normal, retail would bounce back, and all would be good again.

In an article by Anne D’Innocenzio of the Associated Press, Bed Bath & Beyond had 360 stores and 120 buybuy Baby stores, has filed for bankruptcy in a New Jersey court. The company is based in Union, New Jersey, listed assets and liabilities in the range of $1 billion to $10 billion.

The company said it had secured $240 million in financing from Sixth Street Specialty Lending to allow it to keep operating during the bankruptcy process.

The store was founded in 1971, but since 2013 has struggled with weak sales. The biggest competitors were Target, Walmart and Wayfair. During the supply crisis of 2021-22, Bed Bath and Beyond was missing many of its 200 best selling items including kitchen appliances and personal electronics. For stores that depend on the holiday season, it was disaster for financial results. If a store misses the holiday season, it has to wait 9 months to sell again.

A year ago, people had home in the company and the shares were trading at $17, recently they had traded at 30 cents.

Linking to dividend paying stocks, everyone has a bias towards looking at things they do and can see other people doing. In the case of Bed Bath & Beyond yes it had its troubles but it owned the real estate and was worth something. All industries have competitors and it is important to know which are the ones for the investments you have. In general, how is the company doing against its competitors? In retail you can sometimes see for yourself as a shopper, often times sales per square foot are reported or other metrics which define the success of retail. If you are a regular shopper, you can look around and see how often does the inventory move, is it the same as last year or more. If the metrics do not look good, then there are other questions and the important one do you have an alternative investment when you sell?

There are more questions than answers, till the next time – to raising questions.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s