Bed Bath & Beyond (NASDAQ:BBBY) released its second-quarter earnings last week, where it reported
that its net sales of $1.44 billion tanked by 26% from the prior-year period. The net loss for the period
ending Aug. 27 totaled $366.2 million, which was five times the $73.2 million loss the retailer incurred a
year earlier.
Arguably the more important number for the company is its cash position. And during the past three
months, Bed Bath & Beyond used up $198.9 million over the course of its day-to-day operations. That's
significantly worse from the positive $74.8 million that the business brought in a year ago. As of the end
of the period, Bed Bath & Beyond's cash balance totaled $166.7 million versus more than $1 billion this
time last year.
Although the company has revolving credit that gives it added liquidity (up to $0.85 billion in total), Bed
Bath & Beyond needs to stop the cash burn otherwise things could quickly deteriorate further, requiring
more borrowing and potentially stock offerings as well (i.e. dilution for existing shareholders).
Given the underperforming sales numbers, mounting losses and cash burn, Bed Bath & Beyond remains
one of the riskiest stocks that you can own right now. The company's fundamentals are downright awful
and unless meme investors start to bet on the stock again, it's likely that its shares will plummet even
further down.
Overall, investors are better off steering clear of this stock as you could incur significant losses from
taking a chance on this struggling business.
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