Here’s the deal: Shares fell more than 20% on Wednesday after the company announced layoffs and store closings in its latest effort to right the ship. It is laying off about 20% of its staff. It will close around 150 of its approximately 950 physical stores. And to keep the lights on, Bed Bath & Beyond secured a $500 million financial lifeline, a sizable loan that it hopes will buy it time and keep vendors from rushing out.
Here’s what the interim CEO had to say: “We’re embracing a simple, back-to-basics philosophy that focuses on better serving our customers, driving growth and generating business returns.”
Coupons are out of fashion.
Bed Bath & Beyond was a discount shopper’s dream in the ’90s. It had a million different brands and gained a loyal consumer base with its coupon strategy that often rewarded shoppers 20% off or more . Now those discounts are easily found online, and Bed Bath & Beyond was way behind the e-commerce curve compared to rivals like Target and Amazon.
Volume is out; curation is in fashion.
Walking into a physical Bed Bath & Beyond store in the ’90s was the adult equivalent of touring the Wonka Factory. You could get lost in mountains of bath mats, cutlery, GoodGrips, and all the As Seen On TV gadgets your little thirty-something heart could desire. It was the internet store before the internet. A little of everything, everywhere, all at once. The problem with abundance is that it is overwhelming. No one wants to go through 300 shower curtains to find the one they like best. Come on, shop, just do the work for me and give me like a dozen tops.
The discount has its limits.
Bed Bath & Beyond has long been a destination for premium brands, which don’t like to be tainted by redline discounts. According to our analyst: “If you’re Dyson and Keurig and you’re trying to keep a halo about your brand, the last thing you want is a discount.”
Mess stock mess.
Bed Bath & Beyond’s stock got a big boost this spring when Ryan Cohen, the co-founder of Chewy.com, took a majority stake. Among non-professional online investors, Cohen has a brand of credibility as the vanguard of GameStop’s rally since early 2021. His followers flocked to the stock, thinking their hero would work his magic and use his power as a shareholder to force a turnaround. in the company. Just five months later, Cohen bailed out, selling his entire stake and making a net profit of $60 million. Why? Cohen is not saying. Leaving others to speculate that he felt the company could not be saved or was not worth the effort.
Whats Next?
First, a lot of pain for the employees. Suppliers are likely to be reassured by the cash infusion, but at the end of the day, the company still has a lot of debt. And it’s a tough time, with inflation hitting demand for home goods and supply chains still unraveling, for any retailer to undergo the kind of extreme makeover that Bed Bath & Beyond needs.
NUMBER OF THE DAY: 132,000
The private sector added 132,000 jobs in August, ADP reported on Wednesday, far less than the 268,000 jobs added in July, indicating the red-hot pace of US hiring may be slowing, according to payroll data. . The Economist had forecast the figure for August to be around 225,000.
“We could be at a tipping point, from supercharged job gains to something more normal,” said Nela Richardson, chief economist at ADP, which tracks hiring in the private sector. “My takeaway from these numbers is that companies are cutting their additional staff.”
Attention: Historically, the ADP report has appeared on the Wednesday before the official monthly government jobs report, and has generally been seen as a preview of things to come. But in recent years, the ADP figure has lost some credibility and has often strayed far from the official tally. That prompted the company to revamp its methodology, and this is the first report it has published since completing that transition. Tune in Friday to see how it compares to the official report from the Bureau of Labor Statistics…
UP
Here at Nightcap, we love a smooth finish, so let’s end with some slightly sweeter news:
The bourbon boom has strengthened and this week’s gains suggest that Wall Street is still whiskey crazy, my colleague Paul R. La Monica writes.
Brown-Forman, which owns Jack Daniels, reported earnings that easily beat forecasts.
Sales rose 11% to $1 billion, beating estimates of $978 million. Earnings rose 30% to $249 million, or 52 cents a share. (Analysts had forecast earnings of 47 cents a share.)
Inflation Inshmaytion? Though costs are rising everywhere else, consumers seem willing to splurge on higher-priced bourbons like Woodford Reserve and Old Forester (also owned by Brown-Forman). Sales of those premium spirits were up 35% from a year earlier.
The reason: 2022 may be marked by anxiety about recessions and rising prices, but to some extent America is saying, YOLO, let’s get drunk.
Brown-Forman noted that strong demand for alcoholic beverages at airports and on cruise ships helped boost sales. Also popular: His canned cocktail innovation that ultimately made Jack and Coke a powerful portable drink.
Shares of Brown-Forman rose slightly on Wednesday, and the stock has gained about 10% in the past three months, even as the broader market has slumped. In particular, beer stocks such as Anheuser-Busch and Molson Coors have lagged.
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Source: www.cnn.com