Target's Bad News Is Even Worse for Bed Bath & Beyond

Last week, Target (NYSE: TGT) slashed its fiscal 2022 guidance for the second time in less than a month. Rising inventory levels and a demand slowdown in many discretionary merchandise categories are combining to pulverize Target's profitability.

On the bright side, while 2022 will be painful for Target, the discount retail giant remains solidly profitable and should bounce back within a year or two. The same can't be said for Bed Bath & Beyond (NASDAQ: BBBY), though. A sharp drop in home furnishings demand represents an existential threat for the troubled retail icon.

Two months ago, Bed Bath & Beyond reported awful results for the final quarter of its 2021 fiscal year. Comparable sales declined 12% year over year. Meanwhile, surging supply chain costs crushed its profitability, causing adjusted EBITDA to fall by nearly $200 million year over year, plunging into negative territory.

Source Fool.com