Welcome back to closing bell on cheddar news. Everyone
while the retail industry still in flux and still under
pressure. Bed bath and beyond in particular reporting dismal
first quarter results this morning, replacing the Ceo Mark
Triton in a C suite shakeup. And it does
come after reports that the chain is implementing some interesting
cost cutting measures, cutting hours. That's pretty typical
. But even turning off A C in some of
its stores turns out it's not the only big box
retailers struggling many are dealing with continued headwinds, like
high transportation costs, certainly fuel costs and excess inventory
that they're even thinking of changing return policies, letting
you keep items that you intend to return. So
joining me now is Burt Flickinger, managing director of
Strategic Resource Group, that's a retail consultancy firm birth
. Thanks so much for coming on the show.
Let's break down this retail sector together and kick things
off with bed bath. Are you surprised about the
earnings missed and the pressure that this company remains under
, Kristen? Not surprised because we're going through to
your key point going in massive accelerating retail ice age
and bed bath and beyond. Is one of dozens
of retailers that are in danger of going beyond the
date amount today to viability next quarter next year,
it's etcetera. And it's a company that's just had
too many challenges transitioning from family management to professional management
. So the stocks in a free fall issue and
your team have reported very well. So here's a
question. The stock is below$5 a share today
. It's at a new 52 week low, really
at its lowest level birth that we've seen in years
, even following, falling below that earlier pandemic low
. But is it all on the shoulders of the
Ceo, I mean, are you confident that a
new Ceo can actually turn things around? Because this
former Ceo, the outgoing Ceo actually had a lot
of momentum behind him. People on the street really
liked him. That's because the people on the street
don't know the detail and the rhythm of retail christian
, the way the way you can tell you and
, and and others knows so well. He was
a merchant and a very good merchant at target,
but he never run a company before. And this
is a very difficult company to run. It's got
a number of different operating divisions. They bought out
businesses started by their Children. So, bye bye
baby. A very good asset. Armand drug could
be a good asset, but they have twice as
many, they have 700 to 1000 more stores than
what they actually need. And they've been reversed category
killed by everybody from target to the dollars dollar stores
to the category, dominant stores. And they benefited
from the bankruptcy of Linens and things and a number
of others during last retail recession in 2008, but
there's nobody for them to knock off and they're facing
much better capital,ized much more capable competitors and their future
is very uncertain at best, would not buy the
stock and short sellers are making a lot of money
. Okay, well, let's talk about the future
of this company in particular before we talk generally about
the retail space again, the stock below$5 a
piece Near its lowest level in decades. Birds.
So certainly feeling the pain. What's the path forward
? Has a new ceo. Could we see a
potential bankruptcy? Could we see it actually be acquired
at a stock price of less than$5 a share
is an attractive takeover target. It's an attractive takeover
target. Kristen at a dollar or$2 a share
. One quick qualification. The founding families deserve a
tremendous amount of credit for making this a retail powerhouse
for the better part of half a century. And
they just ran out of time as other competitors,
uh, site saturated their trading areas and got ahead
of them on the Internet. That said a new
Ceo can't fix it fast enough if they sold bye
bye baby. To a strategic, potentially a target
, potentially a CVS that would help selling harmon harmon
drugs as a deep discount drug form format. The
mickey mona's Jack Futterman and others made a tremendous amount
of money with over the years. That could be
a good acquisition for CBS or potentially an international drug
chain and the best way to, for them to
monetize the company is to sell the leases and the
real estate property assets that they have, uh,
to strategic shopping center buyers that can reconvert it to
companies that are more profitable per, per property and
per square foot because this, this, this is
a company with low productivity per square foot, but
the real estate's got great modernization, but christian,
it's got to be fastest lightning because they're burning close
to 100 million in cash every month. They operate
us, they're operating now. So they've got a
tall task ahead of them Burt to say the least
. As you just laid out there. What about
other retailers? Are there other retailers that you're worried
about whether it's bankruptcy executive changes potentially being purchased themselves
. I mean, target one of the biggest ones
out there, clearly struggling walmart to some extent to
. But target actually seems to be underperforming not so
sure a company that they will actually be taken over
. But what's your general read? Kristen the key
cheddar headline for all, all consumers in all investors
is all of retails of train wreck. I just
got back from Indianola Mississippi with our team walmart Supercenter
3 77 parking lots empty. Same with the Walmarts
in their home state and little rock. Everybody's struggling
every class of retail trade with the exception of food
retail and with the exception of wholesale clubs and the
customer accounts even in wholesale clubs have been dropping.
So run from retail, the only safe harbor is
really agriculture and, and food at this point,
food retail and ideally food distribution. But I forecast
the epic retail recession in 2006 that hit between 2008
and 2010 and this one kristen and cheddar headline.
This retail recession is going to be as bad or
worse, Burt, certainly sounding the alarms. All
of retail is a train wreck, in his own
words, and does call for a recession here on
the horizon. That was Burt Flickinger, managing director
, a strategic resource group.