We believe Bed Bath & Beyond is still poised for additional expansion after emerging from the housing and general macroeconomic downturn in relatively good shape. As the home furnishings industry's sales dropped 20% from 2007-09 (according to the Read more
With strong sales productivity and innovative merchandising, Bed Bath & Beyond possesses one of the most capital-efficient models in retailing. Returns on invested capital should exceed the firm's weighted cost of capital over the foreseeable future.
Less discretionary categories such as linens, towels, cookware, and small appliances offer some resiliency from the slumping housing market. Established bridal, baby, and gift registry businesses are also a plus.
The firm has sizable international growth opportunities. The first international Bed Bath & Beyond store opened in Canada in 2007, followed by entry into Mexico during 2008 through a joint venture.
Accelerated investment in the firm's e-commerce platform should narrow the gap between Bed Bath and its rivals, while allowing the company to deepen the relationship with its millions of customers
The move to add Harmon Face Values and Cost Plus product SKUs across all concepts should drive incremental traffic and meaningful profit gains over the longer term. Read more
A disjointed housing recovery could create top-line volatility, since new homeowners represent a large portion of home-related purchases. Cash-strapped consumers also could trade down to mass merchants for lower-price goods.
Heavy markdown activity and rising commodity prices have created a challenging environment for home furnishing retailers and manufacturers.
The planned construction of an e-commerce distribution center and further IT investments implies a slightly more aggressive growth stance, particularly after the Cost Plus acquisition. This integration could require additional heavy investments and may weigh down overall margins.
Although Bed Bath & Beyond has several moat-like characteristics, few barriers prevent a well-capitalized competitor from replicating its business model.
Intensifying pressure from the e-commerce channel, particularly on commoditized goods, could eat into Bed Bath & Beyond's long-term retail sales and profits base. Read more
Bed Bath & Beyond's stewardship is standard. In general, we consider management to be excellent operators with a strong history of balancing rapid growth and profitability. Co-founders Warren Eisenberg and Leonard Feinstein are still involved with Read more
Bed Bath & Beyond is a premier home-furnishings retailer, operating more than 1,450 stores in all 50 states, Puerto Rico, and Canada. Stores carry an assortment of branded Read more