American home goods retailer Bed Bath & Beyond (NASDAQ:BBBY) may be in real trouble this holiday season due to inventory challenges. While most retailers are struggling with the issue of excess inventory, BBBY is struggling to stock up on inventory on its shelves.
As per a WSJ report, citing analytics company DataWeave, roughly 43% of BBBY’s inventories were out of stock in October, much higher than its competitor’s levels and nearly twice the level of out-of-stock items in the first half. Additionally, customers have been complaining of not finding items they usually bought from BBBY and have shifted shopping to other stores. Even simple everyday products like slippers, bathrobes, storage bins, and candles are out of stock.
Remarkably, this holiday season will be a benchmark for gauging if the troubled retailer has been able to crawl out of financial duress or not. Unfortunately, the sight of vacant shelves tells another story. BBBY has tried to shore up its balance sheet by raising funds and exchanging debt for equity, along with shutting down stores and laying off employees. Also, BBBY has had a management shake-up, but none of the strategies seem to be working for the distressed retailer.
BBBY’s troubles started when it tried to replace American-branded items with its private-label products, but failed to impress the markets. Now, conflicts with suppliers that have been long overdue but unpaid are aggravating BBBY’s inventory lapse.
Memester’s favorite stock, BBBY, continues to have a short interest of above 20%, and its shares have swung with huge volatility this year. Year to date, BBBY stock has cratered 78%.
Is BBBY a Buy or Sell?
Owing to the several problems listed above, BBBY stock has a Moderate Sell consensus rating. This is based on two Holds and five Sell ratings on TipRanks. Also, the average Bed Bath & Beyond stock prediction of $4.75 implies 42.4% upside potential to current levels.