Bed Bath & Beyond Is Thinking Too Short-Term
Bed Bath & Beyond (NASDAQ: BBBY) shareholders were finally given something to cheer about after Tuesday's close. Following a disappointing preliminary look at December's and January's sales that pulled the rug out from under the stock earlier this month, investors once again wondered if the company would be able to restore sales and profit growth. But they've welcomed news that the home-goods retailer has committed $1 billion toward stock buybacks, debt repayment, investment in operations, and store improvements.
Once past the knee-jerk celebration, though, investors wouldn't be wrong to wonder if earmarking $600 million just for share repurchases and the reduction of debt is the very best use of those funds right now. Given the organization's challenging situation -- slumping sales and lack of consumer interest -- that liquidity could be utilized in far more fruitful ways.
"The financial strength of our business allows us to take the important steps needed to return capital to our shareholders and reduce our debt, while at the same time also investing in our customer," said Bed Bath & Beyond CEO Mark Tritton in a press release Tuesday, which partially detailed plans for $1 billion of apparently idle cash. Tritton explained: "This balanced approach to the use of our capital is expected to enhance shareholder value, improve the in-store and online experience and position our Company to achieve our long-term objectives to deliver sustainable growth."
Source Fool.com
