Bed Bath & Beyond on path to bankruptcy

After the bell this Wednesday, Bed Bath & Beyond (BBBY) is going to report their quarterly earnings. Expect earnings to be ugly, and when we say ugly, we mean Jocelyn Wildenstein ugly. Don't let the company fool you. Their earnings aren't bad because of COVID-19. Their earnings are bad because they're a terrible company. They've been losing profits for years and COVID-19 is only killing their last stand.

Grim future for the company

After the closing bell on Wednesday, the company is going to report their quarterly earnings for fiscal quarter ending February 2020. Last quarter, Nasdaq predicted their earnings per share (EPS) to be 0.03, but the company ultimately reported a loss of -0.38 per share.

Since last quarter, the company has only been facing more problems.

"We are experiencing short-term pain in our efforts to stabilize the business, including the pressures of store traffic trends coupled with our own executional challenges," CEO Mark Tritton said in a statement, noting online sales growth of 20%. "I believe we can solidify this growth, while also addressing the broader stabilization of our business."

Declining market cap

BBBY market cap chart. Source:macrotrends

BBBY market cap table

At the start of 2016, Bed Bath & Beyond had a total market cap of $7.61 billion. Today, their market cap is a mere $672.89 million. In four years 90% of their total market cap has shrunk and continues to shrink.

Year after year, Financial Movers are pulling their investments from the company. If the company looses another 50% of their market cap it'll be worth less than $350 million. To put that into perspective, Target (TGT) has a market cap of $52B.

Financial management failure

BBBY revenues table

From 2016 through 2018, Bed Bath & Beyond steadily increased revenue. Amazingly, as revenue grew, net income and EPS dropped. Obviously there's been a total financial management collapse. Specifically note years 2016 and 2019. Both years have almost identical revenue statements, but the company didn't profit anything in 2019. In fact, their revenue was $12B and net income was $(-137) million. Also, EPS is down $4.08 for investors even though revenue is nearly the same. This has to make investors question where their investments are going; because they're clearly not going to anything beneficial.

Expecting the worst

Retail stores all across the country have been struggling to keep stores open. Blockbuster, Borders, Toys R' Us, and Sears have all gone bust. We expect BB&B to soon find their spot on the "once upon a time" list with the rest that have came and gone.

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DISCLAIMER: This article does not contain financial advice. Any and all market analysis is solely the authors opinion. Investors should do their own research before making any investment.