Bed Bath & Beyond's (NASDAQ:BBBY) growth has been decelerating in the recent periods, growing at just 0.9% in 2016. Consistent pricing pressure from online giants like Amazon (NASDAQ:AMZN) and other mass retailers has decreased the operating margin by 50% in the last five years. Bed Bath has struggled to catch up with the changing retail landscape and failed to capitalize on its name recognition, strong national presence and decentralized merchandising. Consistent coupon redemption has also put pressure on gross margins. It is evident that the company needs to take steps to be more agile and frugal to survive, which is where effective use of cash comes in.
Cash Trend
The balance sheet for fiscal-year 2016 shows that the company's state is not hopeless. Cash at 7% of total assets is pretty decent for a retailer, but what worries me is the trend. The same ratio of cash to total assets was at 17% in 2012. In 2012, cash reserve of $1 bn was further fortified by $0.75 bn of short-term investments.
