Covid-19 impacts another well-known business
This massive retailer is shuttering more than 200 stores.
Bed Bath & Beyond (BBBY) has been a staple in retail since 1971. And it has grown to be a Fortune 500 company with over 1,478. But despite their infamous name, they, like many other businesses big and small, have been severely hit by the pandemic.
On Wednesday, the company announced that its sales had fallen nearly 50% of the latest quarter. And despite online sales surging more than 100% during April and May due to many customer’s stockpiling cleaning supplies – the company just isn’t finding solid footing. And this has led to the announcement that they plan to close roughly 200 stores across the nation permanently.
The closings will span over the next two years, starting in late 2020. The hope is by closing some of their stories; they can get back on the road of probability amidst the economic recovery.
Where’s the money?
After running the numbers, BBBY said that by closing down these stores, it should generate an annual cost saving of anywhere between $250 million and $350 million, which could help boost this beaten-down business.
Now, speaking of numbers – according to the company’s last earnings report, sales fell from $2.57 billion last year to $1.31 billion. It also lost $1.96 per share, falling short of analysts’ expectations of a loss of $1.22 per share on revenue of $1.39 billion.
And despite a constant uptick in online sales, due to logistics like high fulfillment and shipping costs – gross margins dropped nearly eight percentage points. Despite these bleak numbers, BBBY stores are reopening, and many are performing ahead of expectations due to a shift in consumer needs. But I’m not jumping in on the optimism. In fact, I’m going to play this bear forecast to my advantage.
Here’s how I plan to do just that…
How can I get some?
Sure, the stock market has been on a bullish streak lately. There’s no denying that. But as always, there are sectors and stocks that aren’t turning the same direction as the market. And I believe that BBBY is one of those.
So, don’t buy into the hype of promising numbers and consumer attention.
Because the truth is, coronavirus is still here and there could be even more shutdowns in the future, leading to even more disappointing numbers for BBBY than we’re seeing now.
That’s why despite remaining mainly bullish and looking to get long in the market, if I’m playing this stock, I’m going to be looking to short it and make fast cash. Because I truly believe that the bears will run this stock for the foreseeable future.
In the spotlight: Jobs numbers…again.
The jobless claims fell by almost 100,000 in early July. This decrease took the number to 1.31 million – a four-month low. But as always, I’m going to hold off on popping the champagne to celebrate. Because when you look at the pace of layoffs still happening, the numbers are quite high. And few things can bog down the economy like a constant stream of lost jobs.
Now, the number of people receiving traditional jobless benefits declined from 18.8 million to 18 million. But an additional 1.04 million people applied for benefits last week, using the temporary federal-relief program. This pushed the combined total for the week to 2.35 million.
These numbers are why I continue to believe that this recovery is one that we need to watch closely – and I’ll be keeping you updated every step of the way.
One final point…
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