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Bed Bath & Beyond Inc - Stock Quote BBBY

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Morningstar's Bed Bath & Beyond Inc Stock Analysis

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Bed Bath & Beyond's Turnaround Struggles to Gain Steam Amid Inflation and Supply Chain Pressures

Jaime M. Katz, CFA Senior Equity Analyst

Business Strategy and Outlook

| Jaime M. Katz, CFA |

In October 2020, Bed Bath & Beyond put forth an updated strategy to revitalize its brand and regain customer confidence by focusing on its core properties. As such, the firm divested peripheral brands such as Cost Plus and Linen Holdings in order to focus on the Bed Bath & Beyond, Buy Buy Baby, Harmon Face Value, and Decorist labels. To help elevate its brand perception, it has combined its online and in-store inventory management with its omni-always initiative in the hopes of capturing more e-commerce business and avoiding the long restock times and uneven inventories that previously plagued the firm. Additionally, it has been investing heavily in both its digital and brick-and-mortar platforms, with a revamp to the website for a more frictionless checkout process and a remodel of its physical stores to offer a cleaner and more enjoyable shopping experience. The firm has attempted to rely less on its iconic blue coupons by giving consumers a good everyday value, but we surmise some discounts will persist over the long term. It also continues to rightsize by shuttering underperforming Bed Bath stores, shrinking the total store base to 995 at the end of 2021 (from 1,500 at the end of 2019). In contrast, management expects 50% sales growth at the baby label by 2023 via new markets, with the brand already delivering $1.4 billion in sales in 2021. Even so, we see total sales declining 6% in 2022 as the net footprint continues to contract (with inflation and stock outs impacting near-term demand) before returning to a low-single-digit growth rate in 2023.

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Bed Bath & Beyond Inc's Company Profile

Business Description

Bed Bath & Beyond is a home furnishings retailer, operating just under 1,000 stores in all 50 states, Puerto Rico, Canada, and Mexico. Stores carry an assortment of branded bed and bath accessories, kitchen textiles, and cooking supplies. In addition to 809 Bed Bath & Beyond stores, the company operates 133 Buy Buy Baby stores and 53 Harmon Face Values stores (health/beauty care). In an effort to refocus on its core businesses, the firm has divested the online retailer, One Kings Lane, Christmas Tree Shops and That (gifts/housewares), Linen Holdings, and Cost Plus World Market in recent years.

650 Liberty Avenue
Union, NJ, 07083
T +1 908 688-0888
Sector Consumer Cyclical
Industry Specialty Retail
Most Recent Earnings Feb 28, 2022
Fiscal Year End Feb 27, 2022
Stock Type Distressed
Employees 32,000

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