Winning Consumers Back Will Be Challenging For Bed Bath & Beyond, Says This Analyst

Telsey Advisory Group analyst Cristina Fernandez reiterated an Underperform rating on the shares of Bed Bath & Beyond Inc BBBY with a price target of $3.00.
When BBBY reports 2Q22 results on September 29, the analyst's focus will be on the need for an additional cash raise, the comp so far in September, the pace of cost cuts, the inventory position, and progress on the merchandising initiatives toward national brands.
Fernandez expects the inventory position to be high and is modeling an increase of 11% to $1.8 billion, given the comparable sales decline and inventory receipts for the holiday season.
Related: Bed Bath & Beyond Bankruptcy 'Beneficiaries' Gain Analyst Support As Holiday Season Nears
So far in September, store traffic data from Placer AI shows ongoing year-on-year declines with traffic at Bed Bath & Beyond (22%) versus (28%) in Q3 FY22, added the analyst.
Fernandez notes the recent debt raise gives Bed Bath & Beyond more time to adjust costs and rebalance its merchandise mix.
However, the analyst remains concerned by the magnitude of the sales declines and believes it will be challenging to win consumers back in a softer economic climate.
Also Read: Was Bed Bath & Beyond A 'Pump And Dump'? Ryan Cohen, Deceased CFO Named In Shareholder Lawsuit
Price Action: BBBY shares are trading lower by 1.17% at $7.19 on the last check Thursday.
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