Here are 5 Things Bed Bath & Beyond Could Announce on Wednesday

We’ve been waiting since June 28th for Bed Bath & Beyond to tell its shareholders, employees, suppliers and, oh yes, its customers what it’s going to do to try to fix what has very quickly become one of the most broken retailers in America.

Since announcing disastrous results at the end of June that forced the exits of its CEO and chief merchant, Bed Bath has been on a roller-coaster-meme-shaken ride, its stock up and down faster than a Duncan yo-yo. It’s weathered downgrading from analysts, third-party finance firms cutting off its credit, vendors shutting down its new goods pipeline after not being paid and a perfectly dismal clearance atmosphere in its stores and online, reflective of a retailer on the verge of collapse. And oh yes, it has no permanent leader, a balance sheet close to swimming in red ink territory and, by the way, it’s in a market sector – home furnishings – that has turned decidedly soft as consumers spend their inflation-racked money on pursuits outside the home.

If it wasn’t for bad news, there’d be no news at all about Bed Bath & Beyond.

This Wednesday morning BBB executives have scheduled a presentation — a “strategic update,” it says — to tell the world what they are going to do about all of this. And while no one is expecting miracles, apparently investors believe there will be good news and have bid the stock up around 30% over the past few trading days. Hope springs eternal when it comes to Bed Bath & Beyond, it seems.

But reality? Well, here are some of the things interim CEO Sue Gove and other execs might – operative word, “might” – announce on that call:

  1. New Financing

This is likely to be the big takeaway from Wednesday. Press reports, primarily in the Wall Street Journal, have said the retailer has lined up about $400 million in new financing to tide it over as it works out its cash-flow crisis. Of course, at a burn rate of as high as $375 million a quarter that’s not going to last very long. Don’t be surprised to hear there is more money incoming, hedge funds love to double-down on risky bets…and right now, it doesn’t get much riskier than BBB.

2. BuyBuyBaby

Considered the most valuable asset the company has – ironic in that it was originally an afterthought started by one of the original founder’s kids, never getting much management attention – this brand will apparently be the collateral for at least some of the new financing. That puts selling it off the table but there are other options. What about spinning it off, with the parent company keeping a significant equity stake in it but selling a chunk of shares to investors, raising perhaps $300 or $400 million but still keeping control? An interesting solution, don’t you think?

3. Management

One has to assume the line is not stretching around the block at company headquarters in Union, NJ with people applying for the CEO job. There may be significant financial incentives involved but it’s a tough spot to take and if those perks revolve in any way around stock options, it may not be much of a draw. That’s why it’s quite possible that Gove – who does have retail management experience – will be named acting CEO rather than interim, signifying that she is going to be the lead dog for the short-term and that the search for a new president is not a top priority. (Remember it took them almost six months to bring on a new CEO last time and things weren’t nearly this bad.) Doubtful she will get the job on a permanent basis but the company needs some stability in the corner office right now and a new hire will face a steep learning curve, a luxury they simply cannot afford right now.

4. Store Closings

From its high of some 1,500 stores under a variety of nameplates including about 1,000 Bed Bath & Beyond locations, the company, as of the end of May, operated 955 stores in total, 769 of which are Bed Bath units. Expect that number to go down after Wednesday. Don’t be surprised if another 150 BBB locations are axed and if they really want to focus on the core, they could close (nobody is going to buy them) the 51 Harmon Beauty/Face Values stores and even sell-off the dozen joint-venture locations in Mexico. Wall Street likes these kinds of things and, besides, circling the wagons around the mothership is not a bad idea in a time of crisis…and this is certainly a time of crisis.

5. Sale, Sale, Sale

Since the start of July, BBB has been pushing the clearance button like a morphine drip but frankly it’s been underwhelming both in stores and online. If there are still any merchants left in Union, they need to get really real about blowing out the bad inventory and raising cash. Signs in stores and emails are just not enough anymore. They need a big TV ad campaign, maybe radio, maybe even print. Big banners outside the stores need to go up, blasting “BIG, BIG BED BATH & BEYOND BLOW-OUT” and they need to back it up with a coordinated effort in-store and online. Put Sue Gove herself on those TV ads with a heartfelt appeal to shoppers. Even better get Snoop Dogg, he can be bought to sell just about anything it seems. This is no time for subtleties.

Full disclosure: None of the above may actually happen and Wednesday’s announcements could be incredibly underwhelming…in which case get your broker on the phone and short the hell out of this sucker.

2 comments

  1. I lived on the Upper West Side, blocks away from BB& B’s Broadway & 65th Street location from its opening to it’s — ho hum, boring “nothing new here” environment. From its arrival decades ago, like countless others, I shopped there on a regular basis from Christmas presents to updating wall or Livingroom decor, wedding gifts from a well stocked and curated variety and always products from its name: bed and bath linens, etc. Don’t know when things began to unravel but they certainly did when I couldn’t find ANYTHING I wanted to buy!

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