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00:00Little bit of a complicated story. It's hard to know where to start. Take a look at shares of Bed Bath and Beyond. Now of course on the day you're off about 20 percent exactly one year ago June 30 shares peaked at around thirty three. You're still off now from that high. Eighty five percent. It's really hard to understand. Mark Triton of course CEO stepping down. Coming in another sort of lackluster top and bottom line for the quarter. Some inventory issues. Some activists issue with the baby division of course but really just sort of a big picture struggle through the pandemic. This is a company that really highlights that struggle. We can dig into the struggle now much more with Anthony to become the managing director at New Capital Bed Bath and Beyond accelerating on the terminal. And Anthony it feels as though you're pretty passionate that this company is going one direction in the south. Absolutely. And it's funny you know in the intro you talked about the pandemic and some things some sort of pandemic victim. I absolutely positively disagree with that. I mean home goods retailer did really well last year in the year before. And I had this ability not because I cover our age I cover we know my cover floor. And of course I used to cover this company at home. We benefited from that bed Bath Beyond. Not so much. And so you know babe really lost a ton of market share and a ton of peace more relevant. And now that the macro is a headwind as both the tailwind that it's in the past two years they're in a very bad way. They were in a very bad way though. Anthony before Mark Territory arrived and there was a lot of high expectations I think for him given his previous employment and his accomplishments while he was at Target here. I'm curious that what transpired over the last couple of years or rather what didn't transpire that sort of led them a to the company to this decision that he needed to be replaced and B to the fact that they haven't been able to keep up with some of the competitors that you just named. So look I think that you know markets are trading when he was named CEO of Fed Best. It was seen as a real coup. I mean this is the guy that was head merchant at Target. That's one of the best head merchandising jobs out there. But he wasn't ready to be the CEO of a publicly traded company. It's just that simple. You know look I think that they've actually done a lot of the things that I would have asked them to do over the last couple of years like rationalizing their merchandise assortment bringing in more private label products making their products more price competitive with the Amazons the world investing in omni channel. The best thing non core competency did every single thing you would want them to do. But I just think that the patient is too far gone. The one thing that I will put on him that never made sense to me was aggressively buying back stock when the company was struggling mightily. It never made sense and all it's done is really impaired. Their liquidity position. What do you make about unlocking future value at this point. A lot of act while activists will say that word loosely looking at maybe the sale of the buy buy baby division. Is there any way for this companies to still unlock value in your opinion. No absolutely not. I mean you know look there is value in bye bye baby. But we've just got to keep it real here. I mean bye bye baby. Probably did about 70 million dollars and he died last year. The most anyone is going to pay for that. Maybe 10 or 11 times. So five buy babies maybe worth 700 to 800 million dollars. You know the company right now has a net debt of a billion three. So you know it's going bye bye baby. It's not going to be enough. Not going to be even remotely close to enough. And I could foresee a scenario in which five baby baby is sold but out of a bankruptcy. Oh OK. Su Keenan potential bankruptcy. Well to avoid that Anthony Sue goes. Does she become permanent CEO. Who do you want to see bringing the leadership to navigate these sorts of waters. Look here's the problem OK. And I don't know to go from front front from Adam or eat for that matter. It's going to take a long time to first find interview negotiate with a competent CEO. And by the way good luck with that. You know last I checked there aren't a lot of people who are trying to get on a sinking ship. Yes they're trying to get off. But let's even assume that they do find somebody that's incredibly talented and actually wants the job. It's going to take him or her a long time to figure out where the coffee machine is much less formulate a turnaround plan and start to execute that plan and we start running out of time. I do not believe from a little I know that Hugo is the permanent answer. And to some extent that makes the situation even worse from my perspective. Yeah certainly not. I guess what you were once a traditional CEO definitely more of a finance person. Maybe there is something salvageable here. Anthony maybe we can talk about what can be salvaged even if this is not a standalone publicly traded company. Maybe you can continue on in some form or another. Is there value in the real estate. Is there value in the brand. What potentially could be left. You know whenever retailers get in trouble people start to talk about the value of the real estate. What a lot of people don't understand is the vast majority of retailers do not own any of their real estate. I mean you know maybe they own a couple of stores here and there maybe on a distribution center here or there. Most of the stores and distribution centers for that matter are leased. The only value here is in bye bye baby. Like I said maybe worth a hundred eight hundred million dollars. I mean the Bed Bath and Beyond brand. I mean I mean we're talking like maybe a couple million bucks. I mean it it's just not a ton of value there. So no there isn't this sort of unlock value that people are just sort of overlooking. You know look you know I know you mentioned an activist before. So let's you know let's put on the table. Let's talk about Ryan Cohen. The emperor has no clothes. I mean this company is in a bad way. And the notion that this guy is somehow the second coming not so much as an equity analyst focusing on the fundamentals the health of the balance sheet maybe the mistakes of buying back shares and sort of further weakening the financial position. What cues are you taking from the way the bonds are trading on this company the way you said maybe they don't own the real estate. How are you looking at this from the cash flow from a sort of bottom up way that how you re rethinking the balance sheet and the cash flow of this company today. That's a great question. And to some extent the bondholders were the canary in the coal mine because the you know essentially a member from behind has publicly traded debt that matures in 2024 2034 and 2044. And those funds been trading well below par for quite some time. I mean you know they are in distressed territory. They're trading as junk. And you know look we're we're still working through our numbers but it's you know look they said that quarter to date second quarter comparable sales are down 20 percent. This is starting to look real scary.

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Bed Bath & Beyond Falls to Lowest Level Since April 2020

Anthony Chukumba, Loop Capital Markets managing director, explains why he's so bearish on Bed Bath & Beyond stock. Shares dropped to their lowest level since April 2020 on Wednesday. He's on Bloomberg Television. (Source: Bloomberg)

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