Summary
- If you look at the performance of BBBY's stock price over recent months you would think that the company has re-invented itself and has overcome the challenges it's facing.
- However, if you insist on looking at the long-term trend, you realize that things are still bad for "Bed" and that there's no operational improvement beyond the "Beyond" stock bounce.
- The new CEO admits that an "imperative change" is needed, but with nothing real to hang onto, we doubt that this is a viable operational transitioning business.
- The sale-leaseback translation that the company has entered recently is suspicious at best and may raise serious concern regarding the company's ability to maintain its dividend payout.
- The recent extreme headwinds from China, coronavirus, and Amazon only put another stamp on our gloomy view for BBBY, and we continue seeing pressured sales ahead.
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Summary
Bed Bath & Beyond (BBBY) has had an amazing run over the past few months, seeing the stock more than doubling. However, when one remembers the dire straits of brick-and-mortar retail (XRT) on one hand, and the long-term trend on the other hand, there's really not much to cheer about.
In this article, we will show that in spite of the perceived recent recovery (in stock price), there's not much recovery in the company's fundamentals. As a matter of fact, we see some troubling signs, and if anything, we identify deterioration in the operational results.
Add to that the negative impacts of China and the coronavirus, slower economic growth (in general), and the continued, tremendous success of Amazon (AMZN), are only a few of the immediate risks that the company is going to face.
We believe that Bed Bath & Beyond shareholders should expect a rough period ahead, and therefore suggest that saying "bye, bye" isn't only relevant to "Miss American Pie" but also to BBBY.
