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Why Bed Bath & Beyond Stock Gained 17% in May

By Demitri Kalogeropoulos – Jun 2, 2020 at 9:35AM

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Investors got a bit less pessimistic about the specialty retailer's growth potential last month.

What happened

Bed Bath & Beyond (BBBY 0.48%) shareholders outperformed a surging market last month. The stock jumped 17% in May compared to a 4.5% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally removed only a tiny portion of recent losses, though, as shares remain lower by nearly 60% so far in 2020.

A woman shopping using her smartphone.

Image source: Getty Images.

So what

May's stock price boost was mostly a reflection of rising optimism in the hardest-hit segments of the retailing industry. Bed Bath & Beyond joined struggling peers like Kohl's in rising last month as investors began to look past the current store closures to the resumption of normal selling activity.

Bed Bath & Beyond added to that optimism by announcing plans to have most of its stores open by mid-June.

Now what

The retailing chain's broader 2020 sales and earnings results should be pressured by the COVID-19 disruption, and growth wasn't looking good before the pandemic, either. Those challenges suggest that investors might want to wait for concrete signs of a rebound before buying shares of the specialty retailer.

Sure, its online channel saw a spike in volume during social distancing efforts in April and March. But Bed Bath & Beyond likely has a long period of work ahead that includes rethinking its physical store presence, branding, and merchandise offering mix.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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