Bed Bath & Beyond may be fend off for a quicker-than-expected demise if the company doesn’t shake things up, Anthony Chukumba, look after director and senior research analyst at Loop Capital Markets, told CNBC.
“If they balance on their current trajectory, this could be Sears, just 5 to 10 years earlier,” Chukumba put Thursday on “Power Lunch.”
Bed Bath & Beyond “should be more forceful in closing stores” and building its online presence, he said.
Its stock nosedived more than 18 percent on Thursday after the home passables retailer issued a weak 2018 forecast.
While Chukumba acquiesced that the company is still profitable, generating positive cash rush and having a “relatively under-leveraged balance sheet,” he said it is not closing trust ins fast enough to continue competing in the digital world.
“They possess talked about closing 40 core Bed Bath & Beyond collects this year. I don’t think that’s enough,” he said. “And they’re in fact going to open about 20 Buy Buy Baby and Cost Plus cooperative stores.”
Bed Bath & Beyond is parent company to both Buy Buy Baby and Cost Plus.
“The facer is that [Bed Bath & Beyond] sells a lot of commodity products, nationally branded products that you can light upon at other places and in many cases for less,” Chukumba said.
In a trimonthly, in-house pricing study, Loop Capital Markets found that Bed Bath & Beyond is helter-skelter 18 or 19 percent more expensive than e-commerce behemoth Amazon. Bed Bath & Beyond has long been offering coupons of 20 percent off to tempt shoppers into stores. But Chukumba said that has only caused borders to drop “a countless number of quarters year over year.”
Bed Bath & Beyond routine has declined 23 percent in the last month, 55 percent in the after year, 76 percent down in three years and 74 percent in the definitive five years.
Still, Chukumba has a hold rating on the stock more readily than a sell.
“We’re just not sure there is significant additional downside here, at hardly over the next 12 months,” he said of the discounted stock, which necked at $17.21 on Thursday.
“They’re not going away anytime soon,” he voted.
Bed Bath & Beyond could not be reached immediately for comment.