Here’s the deal: Shares fell more than 20% on Wednesday after the company announced layoffs and store closures to get the ship back on track. It is laying off around 20% of its staff. It will close around 150 of its approximately 950 stationary stores. And to keep the lights on, Bed Bath & Beyond secured a $500 million financial lifeline — a sizable loan it hopes will buy time and keep sellers from rushing exits.
Here’s what the interim CEO had to say: “We have a no-nonsense, back-to-basics philosophy focused on better serving our customers, driving growth and delivering business outcomes.”
Vouchers went out of fashion.
- Bed Bath & Beyond was every discounter’s dream in the 90s. It had a million different brands and gained a loyal customer base with its coupon strategy, which often rewarded shoppers with 20% off or more.
- Now, those discounts are easy to find online, and Bed Bath & Beyond has lagged far behind the e-commerce curve compared to competitors like Target and Amazon.
volume is off; Curation is in.
- Walking into a physical Bed Bath & Beyond store in the ’90s was the adult equivalent of a tour of the Wonka factory. You could get lost in piles of bathmats and cutlery and GoodGrips and every As Seen On TV your little 30-year-old heart desires. It was the internet shop before the internet. A little bit of everything, everywhere, all at once.
- The problem with abundance is that it’s overwhelming. Nobody wants to go through 300 shower curtains to find the one they like. Come on camp, just do the work for me and give me a dozen max.
Discounting has its limits.
- Bed Bath & Beyond has long been a destination for premium brands that don’t like being tainted by discounts on the red line.
- According to our analyst, “If you’re Dyson and Keurig trying to maintain a halo over your brand, the last thing you want is discounts.”
Meme Stick Chaos.
- Bed Bath & Beyond stock got a big boost this spring when Chewy.com co-founder Ryan Cohen took a controlling stake. Among non-professional online investors, Cohen is a beacon of credibility as the leader of the GameStop rally beginning in early 2021.
- His followers piled into the stock, thinking their hero would work his magic and use his shareholder power to force change at the company.
- Just five months later, Cohen exited, sold his entire stake, and made a profit of $60 million.
- Why? Cohen doesn’t say it. He left others to speculate that he felt the company either couldn’t be saved or wasn’t worth the trouble.
First, a lot of pain for the staff. Providers will likely be reassured by the cash injection, but at the end of the day, the company still has a lot of debt. And it’s a difficult time — as inflation eats away at demand for homewares and supply chains still unravel — for any retailer to undergo the kind of extreme transformation that Bed Bath & Beyond requires.
NUMBER OF THE DAY: 132,000
“We could be at a tipping point, from supercharged job gains to something more normal,” said Nela Richardson, chief economist at ADP, which tracks private-sector hiring. “My takeaway from these numbers is that companies are slowing down their incremental headcount.”
Warning: the ADP report has traditionally been released on the Wednesday before the government’s official monthly jobs report and has usually been seen as a preview of what is to come. But in recent years, the ADP number has lost some credibility and often differs widely from the official count. That prompted the company to revise its methodology, and this is the first report it has released since completing that transition. Tune in Friday to see how it compares to the official Bureau of Labor Statistics report…
Here at Nightcap we love a smooth finish, so let’s end with some sweeter news:
Brown-Forman, which owns Jack Daniels, reported earnings that significantly beat forecasts.
- Revenue rose 11% to $1 billion, beating estimates of $978 million.
- Earnings rose 30% to $249 million, or 52 cents a share. (Analysts had forecast earnings of 47 cents per share.)
anti-inflation? Even as prices are rising everywhere else, consumers seem willing to invest in higher-priced bourbon like Woodford Reserve and Old Forester (also owned by Brown-Forman). Sales of these premium spirits increased 35% year over year.
The reason: 2022 may be marked by fears of recession and rising prices, but to some extent America is saying: YOLO, let’s get drunk.
Brown-Forman noted that strong demand for alcohol at airports and on cruise ships helped boost sales. Also popular: his cocktail-in-a-can innovation that made Jack and Coke one for good portable strongly drinkable.
Brown-Forman shares were up slightly on Wednesday, and the stock is up about 10% over the past three months despite the broader market falling. Notably, beer stocks like Anheuser-Busch and Molson Coors lagged behind.