Bed Bath & Beyond (NASDAQ: BBBY) is a major retailer of a wide assortment of domestics merchandise and home furnishings. BBBY's retail niche is not a soft one given the real estate sector is still improving from its deep dark hole. BBBY and other home goods retailers tend to do well in housing upturns (see Peter Lynch's Pier 1 Imports love affair). But there is a problem, namely Amazon.com and other disruptors like it.
Bed Bath & Beyond's cash cow popular flagship brand is currently creating cash flow for the exploration of retail expansion, including and keyed on e-commerce. Unfortunately, BBBY has seen its brick and mortar business stall out, and it has been forced to invest in ecommerce and other expansion to find growth again. Rising investment spending and the absorption of less efficient businesses, against stalled revenues, means margins are contracting. Earnings are suffering and analysts and investors are punishing the stock for that trend.
