It might be easy to say Bed Bath & Beyond (NASDAQ:BBBY) won't be around in five years, because the clock is running out on its opportunity to stage a successful turnaround. 

Its business was already struggling before the pandemic with a confused mess of concepts and a lack of cohesion in how it portrayed itself to the consumer. The COVID-19 outbreak did nothing to help, forcing the company to shut down and close off most of its revenue streams.

Couple looking at kitchen items in store

Image source: Getty Images.

Yet because Bed Bath & Beyond can generate lots of free cash flow (when it's allowed to operate) and still has significant brand recognition and value, the home goods retailer has a good chance of avoiding the growing list of businesses declaring bankruptcy these days. 

Let's look at some of the big reasons why it will probably survive but also examine whether they make it a good investment.

Not going anywhere

As disastrous as Bed Bath & Beyond's fiscal fourth quarter earnings report was, where not even the Christmas holiday could salvage a gain for the retailer, it still ended its fiscal year with some $1.39 billion in liquidity and generated $314 million in free cash flow.

That was significantly lower than the $593 million in free cash flow it ended with in 2018, and far below the $1 billion or more it used to produce. But with a business that had difficulty producing any sales growth, it shows Bed Bath & Beyond has a solid foundation it can build upon to turn itself around.

It may have the person to achieve that in CEO Mark Tritton, a Target veteran who joined the company late last year after activist investors ousted most of Bed Bath & Beyond's leadership, including the company founders. He has made significant changes to the C-suite, installing a clean slate of executives to help implement his plans for change.

The retailer is also looking to focus on its core business. Having acquired a hodgepodge of adjacent brands over the years, it is streamlining operations. Bed Bath & Beyond sold PersonalizationMall.com to 1-800-Flowers.com, divested its One King's Lane segment, and also engaged in the sale and leaseback of about half of its real estate.

While such deals lessen the burden on the balance sheet, they do create a rent obligation for the company that it didn't have when it was the property owner. But this raised about $250 million for Bed Bath & Beyond, which management said would go toward debt reduction and other purposes.

But where is it heading?

Those actions may be a good and necessary fresh start for the retailer, but now, it needs to clarify its mission to the consumer.

As part of its effort to drive e-commerce traffic, which delivered 16% comparable-sales growth in the fourth quarter, Bed Bath & Beyond essentially turned its stores into showrooms with more product on display than can actually be bought in the store. The "show more, carry less" concept gives it incredibly deep product selection but creates issues when customers do go into the store to make a purchase but don't necessarily leave with product in hand.

And as Bed Bath & Beyond has tamped down on its once ubiquitous blue and white 20%-off coupons that drove traffic to its stores, weaning shoppers off that strategy will be painful after conditioning them for so long to expect a discount.

The retailer is also transitioning into a more digitally-oriented company, a channel it ignored for years before playing catch-up to the competition. That may create some upheaval as well, though Tritton's experience at Target should help smooth over the change.

Mark your calendars

Tritton is just one person, not a miracle worker. There is a lot that needs to go right for Bed Bath & Beyond to succeed, and the pandemic, not to mention the retail world that will exist in its aftermath, are not conducive to the retailer's success.

Yet Tritton seems like the sort of capable executive who could bring about change, and he has a lot more to work with than Jill Soltau did when she was hired to save J.C. Penney from ruin.

Bed Bath & Beyond's recovery is unlikely to be quick or follow a straight line, but its beaten down stock trades at substantial discounts to sales and book value. At these levels, it is a value stock for an investor with an appropriately long time horizon.