For all the decorative homeware you can think of, Bed Bath & Beyond is the place to go, but is this company a good investment right now?
Bed Bath & Beyond (NASDAQ: BBBY) is the go-to place for all homeware products that will spruce up your house. With everything from robot vacuums to reversible quilt sets and black-out blinds, this is a pandemic-induced redecoration project haven. This year’s social momentum has increased its share price as Bed Bath & Beyond holds meme stock status, so we decided to look at the company and see if Bed Bath & Beyond is a good investment.
The bull case for Bed Bath & Beyond
Bed Bath & Beyond thrived during the pandemic as CEO, Mark Tritton, has made quick work of upscaling the e-commerce sector of this traditionally brick-and-mortar business. Although this re-focus began in 2019, it clearly came at just the right time as the company posted 3 consecutive quarters of positive comparable sales growth during the pandemic.
In its most recent quarter, the home goods store posted comparable sales up by 86% year-over-year (YoY) with its adjusted gross margins at 34.9% and EBITDA coming in at $86 million. Furthermore, the company narrowed its net loss from $303 million the year previously, to $51 million. These are strong results for a company that was not doing too well even a year before the pandemic hit.
To add to this success, Bed, Bath & Beyond has moved forward with plans to release three ‘Owned Brands’ ahead of schedule. It wants to release a total of eight by the end of 2021 and a further four next year. It is estimated that these ‘Owned Brands’ could bring in sales of more than $3.5 billion by 2024, with private-label sales accounting for 30% of its business.
The bear case for Bed Bath & Beyond
Bed Bath & Beyond is currently moving through with its plan to close roughly 200 stores across Canada and the U.S. However, once the pandemic eventually ends, the home store company might find that its loss of physical stores will prove to be a detriment as people will undoubtedly try and return to the high street for their many shopping needs. Yet, e-commerce is definitely here to stay, so the company’s renewed focus in this area should hopefully be able to handle an increase in high street store popularity.
This company has also been one of the companies caught up in the Reddit short squeeze. With many people investing in the BBBY stock but with no real focus on Bed Bath & Beyond’s fundamentals or long-term growth. As such, the stock is likely to experience volatility over the short term. Furthermore, since it also holds meme stock status, this makes it rather difficult to value as a whole, with many analysts believing it to be overvalued. For investors in this company, a long-term buy-and-hold outlook would be a good strategy for this particular hurdle.
So, is BBBY a good buy?
Bed Bath & Beyond does present a good buying opportunity; even though it is likely to see some volatility over the next few months, its long-term outlook is strong. With a continued improvement of its e-commerce sector and its new and potentially lucrative product lines, Bed Bath & Beyond is a good long-term investment.
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- What is Bed Bath & Beyond membership?
Beyond+ is the Bed Bath & Beyond membership which for just $29 per year, members can avail themselves of free shipping, 20% of the entire purchase every time they shop, plus a 50% discount on interior design services.
- Where is Bed Bath & Beyond’s headquarters?
The company is headquartered in Union, New Jersey in the U.S.
- Who is the CEO of Bed Bath & Beyond?
Mark J. Tritton has been the CEO of the company since 2019.
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.