The long and sad saga of Bed Bath & Beyond’s slide from innovative retailer to struggling ram is an objective lesson about what happens when successful companies lose their sights and theirs.
Revenue (late 12 months), which peaked in 2018 at around $12.5 billion, has fallen to about $7.4 billion today. The company’s market value also declined. From a share price of about $80 in 2015, the stock is now trading at around $5. It seems that major restructuring or bankruptcy is inevitable.
Although BBBY is an extreme example, similar concerns are gathering around companies like Apple and Amazon, who have driven their visions, taking with them the excitement and energy that has made them undisputed leaders in their respective categories.
The latest news from BBBY includes the firing of the company’s CEO, Mark Tritton, last month, who was recruited in 2019 from Target. Hiring Triton was to be a rescue mission. He came with marketing credentials, but clearly lacked the skills or vision needed to take the company off the hook.
Tritton was appointed to replace BBBY’s former CEO, Steven Temares, who had also been sacked. Although Temares has been with the firm in various management positions for three decades, he was initially a real estate attorney.
All the turmoil becomes astounding when you consider that since its first big launch in 1985, BBBY has grown to become one of the largest retailers in the country, thanks in part to being among the first to be called true supermarkets and small businesses. BBBY has crushed much of the existing niche home goods industry, family-owned regional retailers of white goods and accessories.
BBBY’s history is similar to that of other success stories, beginning with founders Warren Eisenberg and Leonard Feinstein. They each had a decade of retail experience when they started the company in New Jersey. Their shared vision was a home goods store heavy in variety and inventory, with competitive pricing, and focused on the customer.
According to a 2010 article in HFN Household Goods Trading, BB&Y succeeded, “By making ordinary household products look sexy, even romantic. … the company sought to build conversational communication through advertising through a unique blend of family atmosphere and attentive customer service. .”
It is unimaginable that other vision-driven forces such as Apple, Amazon or Tesla could suffer a similar fate. But the items are there and worth seeing.
Amazon has virtually lost sight of it, just as the company faces deep threats in nearly every aspect of its retail operations. Within months of Jeff Bezos leaving CEO, Amazon (first quarter of 2022) reported its first quarterly profit loss in eight years and the slowest quarterly growth in decades.
Apple faces a similar dilemma with a similar set of facts. Although founder and CEO Steve Jobs passed away 12 years ago, the visionary chief design officer, Jony Ive, remains. She left Apple in 2019 and since then analysts have been watching to see if the company can still innovate and delight new generations of customers. Although Apple shares are still off their peak by about 10%, analysts have lowered their earnings forecasts.
I believe that business is a combination of skills and unique traits that include creativity as well as data. One does not rape the other, they must coexist as they did in the brain of Steve Jobs or Warren Buffett. It’s hard to replicate if not impossible, but I think if you’re heavy on one side, you should invest more on the other. At this point, most companies are still unilaterally listed… and it’s not data.