Best Buy (BBY) has a somewhat unusual history in the realm of retail. That is now happening at Bed Bath & Beyond (BBBY stock). The electronics retailer hired Hubert Joly, an executive with a background in hospitality, to take over the chain when it looked like it was headed for bankruptcy.
Although, at the time, it looked like a mistake, that hire ended up being one of the finest in retail history. Joly intervened and essentially made everything for the merchant different. He made difficult decisions to decrease costs, invest in delivery, and prevent customers from visiting Best Buy before placing an Amazon (AMZN) transaction.
The issue is that Best Buy’s tale essentially stands on its own, which is problematic, at least if you are a failing store. In most situations, it was shown to be practically impossible to save a sinking retail ship.
The company has been having problems for years, and experience shows that changing the CEO (as the store did in June) won’t usually improve the outcome.
Why Bed Bath & Beyond (BBBY stock) Needs a Purpose
When Marvin Ellison succeeded as CEO of J.C. Penney, she had some brilliant ideas but lacked the means to put them into practice. The same could be said of Ellison, who wished to offer new services and sell appliances in areas where Sears had stopped serving its consumers.
The issue is that historically, it has been exceedingly difficult to win back a consumer base that has left. That won’t stop executives from trying, of course, because being the CEO of a failing retailer still pays very well. Not being able to turn things around isn’t bad for your career because you aren’t the reason it’s dying in the first place.
While Soltau is on the board of directors at Auto Zone (AZO), Ellison could not succeed as CEO of Lowe’s (LOW). Because there aren’t many CEO positions available, those at failing retailers will continue to draw brilliant executives who say things like this.
Interim Chief Executive Officer Sue Grove stated, “we are embracing a straightforward, back-to-basics attitude.” To reclaim our preeminent position as the shopping destination of choice for our clients’ most beloved brands and most exciting goods, we were forced to make substantial adjustments and put enablers into place across the entirety of our business. We want to become the most trusted retailer in the Baby and Home categories, where we already have a strong presence thanks to our Baby and Home offerings.
Many statements echo earlier CEOs who permanently or temporarily took over failed firms.
Retail Comebacks Hardly Occur
Best Buy was unusual since it lost sales, but people still visited its shops to look at products, even if they bought them online. When a company loses its client base, it either has to find a new one or win its old customers back.
Perhaps more concerning is that BBBY stock had only $107 million in cash at the end of May, down from over $1.1 billion a year ago. The firm had a 25% decline in total sales and a 23% decline in comparable-store sales in its most recent quarter.
We’ve also seen that vendors don’t send items to shops that may not be able to pay for them, most notably with Sears and J.C. Penney. The company added $500 million in financing in September, but that money only buys a few more months at its current operating rates.
This causes businesses like BBBY stock to spend money on inventory that might not sell fast, and in a year of supply chain problems, it can lead to vendors choosing to sell their goods elsewhere.
Retail miracles happen, but they’re the exception, not the rule. Grove could be the next Joly, but Bed Bath & Beyond (BBBY stock) seems like a company in a death spiral, making its stock down 72% over the previous two months, a clearance rack item you should almost surely stay clear of.
Featured Image: Megapixl @Jetcityimage
Author Faith Yakubu 
