Bed Bath & Beyond Inc (OTCMKTS:BBBYQ)
Bed Bath & Beyond will begin the process of delisting from the public market on May 3, which will result in one less stock being traded on the Nasdaq exchange when it opens on that day.
According to a filing that the company made with the Securities and Exchange Commission, trading in Bed Bath & Beyond’s common stock will be halted beginning on May 3 of this year. In response to Bed Bath’s application for chapter 11 protection on April 23, the Nasdaq has informed the company that it will be delisted.
On Tuesday, Bed Bath & Beyond’s last day of full trading, the company’s stock dropped 27%, ultimately closing at 7 cents. The share price of Bed Bath & Beyond has decreased by 97% so far in 2018, and it has lost roughly 99% of its value over the course of the past three years. The possibility of this happening had been raised by analysts, who pointed out that filings for bankruptcy typically result in a loss of value for shareholders.
However, Bed Bath & Beyond wasn’t always a negative contributor to investors’ portfolios. In point of fact, throughout the majority of the 2000s and into the early 2010s, the stock’s performance exceeded that of both its retail peers and the overall market.
Barron’s is commemorating the upcoming delisting of Bed Bath & Beyond by looking back at the highs and lows of the company’s stock.
In 1971, Warren Eisenberg and Leonard Feinstein established their business, which was initially known as Bed ‘n Bath at the time. The original shops primarily sold linens and towels; however, by 1987, the company had expanded its merchandise assortment to include other wares for the home, prompting the company to change its name to Bed Bath & Beyond to reflect this expansion.
Five years later, in June 1992, Bed Bath & Beyond Inc. made its debut on the public market by listing its shares on the Nasdaq exchange. The subsequent twenty years were marked by a period of explosive expansion for the retail establishment. By the end of the company’s fiscal year in 1998, it had reported its first year with sales of more than $1 billion, and by the end of the fiscal year in 2006, it operated 888 stores in 48 states, an increase from 34 stores in 1992. Buybuy Baby was successfully integrated into the Bed Bath & Beyond business.
The success of the company was recognized by its shareholders. The stock of Bed Bath & Beyond increased in value by more than 5,700% in the 20 years following the company’s initial public offering, outpacing the rise of the S&P 500 by 233% during the same time period and the rise of the Nasdaq Composite by 420%. According to the data provided by Dow Jones Market Data, the price at which the stock traded at its closing was a record high for the month of January 2014.
In the second half of the 2010s, things began to take a decidedly unfavorable trajectory. E-commerce grew in popularity, which increased the amount of pressure placed on traditional brick-and-mortar retailers and signaled the beginning of the so-called “retail apocalypse.”
Bed Bath was one of the businesses that were slow to join the online shopping bandwagon when it first started becoming popular.
Eisenberg was quoted in a recent issue of The Wall Street Journal as saying, “We missed the boat on the internet.”
Although declines in same-store sales started as early as 2015, full-year revenue didn’t begin falling until several years after that point. Early in 2019, the corporation reported its first loss-making quarter of many more to come in the future. Since reaching a new all-time high in January 2014, the stock’s value had dropped by approximately 80 percentage points by the end of the year.
Bed Bath and Beyond started a number of initiatives to try to turn the company’s business around. This included putting former Target (TGT) chief merchandising officer Mark Tritton in charge of the company, only to have him removed from that position later on; beginning work on a private-label strategy, only to have it scrapped later on, and closing stores in favor of expanding its presence on the internet.
These efforts turned out to be insufficient, and by that point it was too late; many analysts anticipated that the pandemic would deal the killing blow.
And it probably would have, if it weren’t for the meme-stock trading frenzy that occurred in 2021 when retail investors flooded the market in droves in a crusade to save the stocks they felt had been unjustly shorted by Wall Street. But the meme-stock trading frenzy prevented that from happening.
Bed Bath swiftly emerged as a fan favorite among those invested in meme stock.
The Bed Bath & Beyond share price reached an intraday high of 204% in the month of January 2021. That was the first of many meme-trader-fueled stock jumps, which continued well into 2022 and 2023. These stock jumps lasted well into those years. The infusion of capital from retail investors may have given Bed Bath & Beyond some breathing room to put its turnaround strategy into action, but it was not enough to save the company.
On January 5, Bed Bath issued its first warning that it was considering filing for bankruptcy, setting off a series of innovative financial maneuvers designed to stave off a potential filing. These maneuvers were undertaken in an effort to prevent Bed Bath from declaring bankruptcy. The strategies were successful for the better part of four months, which surprised many people working in the industry. Bed Bath revealed not one but two separate equity offerings, and it also managed to secure a loan that allowed it to remain operational while it investigated its other options.
However, in the end, investors were able to see through the faltering financial situation of the company and its bloated balance sheet.
“With few hard assets, the company was valued in the billions despite crippling debt and marginal shareholder equity left, which is today negative,” wrote Paul Gray, managing partner of Ironhold Capital. “Today, this equity is negative.” “Artificially inflated meme-stock prices only served to delay the inevitable bankruptcy of the company while gobbling up additional capital.”
Featured Image: Megapixl
