Why Bed, Bath and Beyond was Never a Cheap Stock

Why short-term impairment matters

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Bed, Bath, and Beyond made it in the news a lot recently, and not for a good reason too.

A loss in cash, poor infrastructure, and a billionaire dumping his shares of the company — all in a week.

So, I decided to read up on the company’s annual reporting to read what was all the fuss was about.

What surprised me was how well the company was performing from 2010 to 2018. They were in the green.

So, I couldn’t understand why the company’s revenues and profit suddenly slid in 2018.

One line did pop up in the 2019 income statement that didn’t appear in previous annual reports to that year.

Impairment.

So, I read what the management team had to say about impairment, and the managers said that they never had to record impairment prior to that year.

That was a warning sign to me.

So, you’re telling me that a home goods store never had any impaired items?

To put this in perspective, did the Bed Bath and Beyond stores prior to 2019 manage to sell every little trinket they had and never had to write down any goods?