What happened

Shares of Bed Bath & Beyond (BBBY) were sliding today after Goldman Sachs slammed the stock, saying it was worth just $2 a share. The negative commentary comes after the struggling home furnishings retailer released another disappointing earnings report last week.

As of 12:01 p.m. ET, Bed Bath & Beyond stock was down 2.8% even as the S&P 500 had gained 2% as investors started off the fourth quarter on an optimistic note.

So what

Goldman Sachs analyst Kate McShane reiterated her sell rating and $2 price target following the company's most recent earnings report. That target implies a two-thirds decline in the stock from the current price.

In an analyst note, McShane said, "Although we think Bed Bath & Beyond sounded more constructive with regards to the opportunity in bringing back more national brands gradually, we continue to believe Bed Bath & Beyond will have a hard time driving customers to its store, especially in the second half, given the amount of competition we expect in the home goods industry."

Indeed, Bed Bath & Beyond continues to stumble, with sales plunging and the company bleeding cash. Comparable sales in the second quarter fell 26%, and it lost $320.5 million in free cash flow. A years-long turnaround has not delivered the desired results, and the company ousted former CEO Mark Tritton back in June, casting further doubt on its ability to make a recovery. 

Now what

Though it expects operating cash flow to be breakeven by the end of the fiscal year, that still implies it will be losing money on a free cash flow basis. Meanwhile, the macroeconomic climate presents challenges for Bed Bath and Beyond, as interest rates are rising, fears of a recession are building, and sales in the home goods category were already weak, as so many Americans stocked up on home furnishings during the pandemic.

At this point, a return to stable financial footing seems unlikely for the retail stock.