What happened
Shares of Bed Bath & Beyond (BBBY) fell 12.2% this holiday-shortened week, according to data from S&P Global Market Intelligence, part of a long, steady slide. This helped one analyst come to the conclusion that the home goods retailer may need to "begin to seriously consider 'endgame' scenarios."
Loop Capital analyst Anthony Chukumba told investors a bankruptcy reorganization may be in the cards because it will be too hard to swim against the tide of worsening economic conditions, a deteriorating financial position, and a management team not up to the task of salvaging the business.
Image source: Getty Images.
So what
There was a lot of enthusiasm among investors following activist investor Ryan Cohen revealing he had taken a 9.8% stake in Bed Bath & Beyond back in March, sending its stock soaring to $30 a share. Since then, though, it's been a slog of a trip lower; the home goods retailer trades at about half the price it did before Cohen's ownership interest became known.
While Bed Bath & Beyond's turnaround was never assured, it did seem like a stock that had one of the best chances to do so, considering the brand value its name carries and the narrow focus of its operations (narrower, anyway, since Cohen got the retail stock to shed a lot of ancillary businesses, something it had previously started on its own).
But market conditions are making it more difficult. Rampant inflation, rising prices, and a contracting economy are hitting consumers' ability to spend beyond basic necessities.
Now what
Chukumba's criticism of Cohen seems a bit premature considering he's only been trying to shake things up for a couple of months so far, hardly any time at all to make any effective changes. But the analyst is also critical of Cohen's leadership over at GameStop (GME 2.56%), where he has been involved in reorganizing the direction the video game retailer is heading for much longer.
There hasn't been much revealed there about how he plans to have GameStop survive in a gaming market that's increasingly based on digital games and downloads, but a new non-fungible token (NFT) wallet and a coming NFT marketplace hint that GameStop will be a portal for more than just video games.
NFTs won't do much for Bed Bath & Beyond, though, and Chukumba says Cohen won't be the retailer's "savior."
There was no company-specific news related to the home goods store to cause its stock to drop, but the mounting evidence of a possible recession may just be weighing too heavily on Bed Bath & Beyond.
