3 ms·

The $11.8B mistake that led to Bed, Bath and Beyond's demise

4 points by kristianp 4y ago

emrah 4y ago
From a customer perspective, they could have used the cash to buy more of the merchandise that customers liked. They always had plenty of the stuff noone ever bought and never enough of the good stuff people actually bought. Those always flew off the shelves never to be seen again
msie 4y ago
This is the height of capitalistic idiocy, going into debt to prop the share price through stock buybacks. Whereas if they concentrated on their core business of selling stuff they wouldn't be in such dire straits.
WheelsAtLarge 4y ago
This wasn't a mistake. It's the way activist shareholders push lagging stocks to rise. A common procedure is for someone to buy a large stake in a company that's been around for a while that has lots of assets but the stock has lagged. They then get a few board seats and push the company to borrow against the assets of the company to buy back stock or give a special dividend. This makes the stock rise and they can get out at a profit. The company is then left with a truckload of debt which makes it hard to invest in the company's future. It happened to ToysRUS, Sears and other well-known brands. This usually happens after a company has been around for a while and is unable to keep up with the competition and it's asset rich. It's the way public companies are attacked if they can't protect themselves from raiders. It's hard to tell whether it's a good or bad thing since the company was lagging even before the activist shareholder took control so it could have collapsed anyway. It's the CEO's job to keep the shareholders happy so this does not happen. Here's a story about one hitting Bed Bath and Beyond last year. I suspect there have been others. https://www.cnbc.com/2022/03/25/bed-bath-beyond-strikes-deal-with-activist-investor-ryan-cohen.html https://www.cnbc.com/2022/03/25/bed-bath-beyond-strikes-deal...

3 ms·

The $11.8B mistake that led to Bed, Bath and Beyond's demise

4 points by kristianp 4y ago

emrah 4y ago
From a customer perspective, they could have used the cash to buy more of the merchandise that customers liked. They always had plenty of the stuff noone ever bought and never enough of the good stuff people actually bought. Those always flew off the shelves never to be seen again
msie 4y ago
This is the height of capitalistic idiocy, going into debt to prop the share price through stock buybacks. Whereas if they concentrated on their core business of selling stuff they wouldn't be in such dire straits.
WheelsAtLarge 4y ago
This wasn't a mistake. It's the way activist shareholders push lagging stocks to rise. A common procedure is for someone to buy a large stake in a company that's been around for a while that has lots of assets but the stock has lagged. They then get a few board seats and push the company to borrow against the assets of the company to buy back stock or give a special dividend. This makes the stock rise and they can get out at a profit. The company is then left with a truckload of debt which makes it hard to invest in the company's future. It happened to ToysRUS, Sears and other well-known brands. This usually happens after a company has been around for a while and is unable to keep up with the competition and it's asset rich. It's the way public companies are attacked if they can't protect themselves from raiders. It's hard to tell whether it's a good or bad thing since the company was lagging even before the activist shareholder took control so it could have collapsed anyway. It's the CEO's job to keep the shareholders happy so this does not happen. Here's a story about one hitting Bed Bath and Beyond last year. I suspect there have been others. https://www.cnbc.com/2022/03/25/bed-bath-beyond-strikes-deal-with-activist-investor-ryan-cohen.html https://www.cnbc.com/2022/03/25/bed-bath-beyond-strikes-deal...