Why Bed Bath & Beyond is only worth $1, according to an analyst

Bed Bath & Beyond has entered the retail death spiral that dragged once-proud chains such as Sears and Circuit City into the grave, according to an analyst.

In a new note to clients on Friday, Loop Capital analyst and vocal Bed Bath & Beyond critic Anthony Chukumba reiterated a sell rating and $1 price target on the stock.

Shares rose by 20% from 1:10 PM ET in Friday’s session amid continued speculation that Bed Bath & Beyond is nearing a capital raise to shore up its dwindling cash coffers.

But a cash boost won’t help and the stock is toast, Chukumba said, echoing comments he made on Yahoo Finance Live after the company̵[ads1]7;s dismal earnings report a few weeks ago.

“We also doubt a new ABL [asset-backed loan] would make Bed Bath & Beyond’s suppliers — who we continue to worry could put the company in a death spiral by demanding more onerous payment terms — more comfortable with Bed Bath & Beyond’s near-term and long-term prospects,” Chukumba said.

A spokesman for Bed Bath & Beyond did not return Yahoo Finance’s request for comment on Chukumba’s latest hot take.

Bed Bath & Beyond in “a world of hurt”

To be sure, Bed Bath & Beyond qualifies as a true retail disaster story ahead of the holiday shopping season.

In late June, Bed Bath & Beyond announced a quarterly loss of $224 million for its adjusted operating profit. The company ended the quarter with just $107 million in cash, prompting analysts like Chukumba to worry that suppliers will tighten payment terms at the retailer — a move that would only lead to faster cash flow.

Why Bed Bath & Beyond is only worth , according to an analyst

Shoppers are seen outside a Bed Bath & Beyond store in Orlando, Florida on April 13, 2019, amid reports that the company plans to close 40 stores due to declining sales while opening 15 others. (Photo by Paul Hennessy/NurPhoto via Getty Images)

The retailer also said same-store sales plunged 27% at its namesake brand in the latest quarter as shoppers pulled back on discretionary purchases. Shoppers also continued to avoid the retailer after the misguided move to scale back on their popular coupons.

Along with the disastrous results, the company fired its CEO, Mark Tritton, who had joined Bed Bath & Beyond in 2019 after a successful stint as Target’s chief retailer. Board member and retail veteran Sue Gove is now leading the company on an interim basis.

The track record is so bad that Wall Street is questioning whether the company will survive in its current form.

“Bed Bath & Beyond is in a world of hurt because they’ve burned through a huge amount of available cash, their business has no momentum, and now as we all know they have a huge leadership hole that they need to fill,” Mark Cohen, professor of retail at Columbia University and former longtime CEO of Sears Canada, said on Yahoo Finance Live. “I wouldn’t be surprised at all if they stagger into a restructuring sometime in early 2023.”

Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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