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Long: Bed Bath & Beyond (NASDAQ: BBBY) : Market View

Bed Bath & Beyond is being undervalued by investors who are skeptical of its ability to turn the business around, but the company's new management team has experience successfully implementing turnarounds at other retailers. The company's supply chain improvements, private label brands under new CEO Mark Tritton, and focus on enhancing the customer experience through store layout changes and omnichannel retail can help drive growth and set BBBY apart from competitors.

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George Rao
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72 views

Long: Bed Bath & Beyond (NASDAQ: BBBY) : Market View

Bed Bath & Beyond is being undervalued by investors who are skeptical of its ability to turn the business around, but the company's new management team has experience successfully implementing turnarounds at other retailers. The company's supply chain improvements, private label brands under new CEO Mark Tritton, and focus on enhancing the customer experience through store layout changes and omnichannel retail can help drive growth and set BBBY apart from competitors.

Uploaded by

George Rao
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Long: Bed Bath & Beyond (NASDAQ: BBBY) 


Ajay Raja, Jimmy Qian, Gabriel Galupo, George Rao 
3M​ ARCH​ | ​TEXAS STOCK PITCH​ 2020 
 
We believe that Bed Bath & Beyond is being undervalued by investors who are pessimistic on BBBY’s ability to turn around their 
business amidst the overall competitive nature of the home furniture market. However, we believe that the market is not 
considering how management expertise has influenced this current turnaround plan, which mimics many traits of other 
successful brick-and-mortar companies. The customer loyalty inspired by BBBY’s brand name, along with the vast improvements 
it can make to its supply chain, product line, and customer experiences will drive the growth of the company going forward. 
 
Market View 
1. BBBY’s previous management has implemented turnaround plans that didn’t 
help the business, so the market is skeptical that this plan is much better than the 
previous ones, especially after the poor Q4 performance. 
2. Looking at the entire brick-and-mortar retail industry, only a few turnaround 
plans have worked historically, and many of them don’t end up achieving their 
desired effect, so it’s difficult to say whether this plan has any merit. 
3. BBBY has fallen behind competitors in improving their customer experiences as 
competition has increased, and the market is not convinced that the turnaround 
plan’s investment will truly be able to help the company. 
 

Variant View 
1. Supply chain and inventory improvements—reducing SKU reductions, cleaning up store clutter, and centralizing 
supply chain management—will make BBBY more efficient and better able to adapt to changing consumer trends. 
2. Private label brands, developed under Mark Tritton’s previous experience, will make it easier to retain customers and cut 
costs. BBBY started introducing private labels last year with existing plans to release six brands over a year; historically, 
struggling retailers implementing private label brands have expanded margins and grown sales. 
3. New customer experience strategies such as improving store layout and omnichannel will build on top of strong existing 
brand and customer loyalty, allowing BBBY to stand out among other home goods stores and pure-play e-commerce 
players. 
 

Company Overview 
Bed Bath & Beyond is an omnichannel, home goods retailer headquartered in Union, New Jersey. The company’s product line 
includes furnished items such as mattresses, kitchenware and furniture. As of FY 2019, the company has approximately 1,533 
stores in all 50 states plus Canada and Puerto Rico along with $12.03 billion in revenue. 
 

Industry Overview 
Bed Bath & Beyond operates in the home decor market. The field that BBBY operates in is highly fragmented. The company’s 
main competitors in this field are Ikea, Wayfair, Restoration Hardware, HomeGoods, and Williams-Sonoma. One main driver 
for this industry is the robust U.S housing market, encouraging consumers to shop for home good products. Key trends in the 
home decor market are omnichannel retailing, showrooming and private label branding. 
 

Catalysts 
The catalysts for BBBY involve: 1. The introduction of the remaining private label brands throughout 2020 will boost consumer 
interest for the company’s products; 2. As the first group of stores get revamped with better layouts and SKUs, improved sales 
metrics from the stores will drive investor sentiment toward the company.  

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