CNBC’s Jim Cramer on Thursday said it’s time for “wholesale change” in Bed Bath & Beyond‘s management.
“The company still has a good balance sheet, $1 billion in cash, so I think it can be saved,” the “Mad Money” host said. “But I gotta tell you something: not with this management team.”
The home goods chain is grossly behind the new retail landscape, where it must compete with e-commerce disrupters such as Amazon, Cramer said. The company’s “half-hearted initiatives,” such as focusing on private-label brands, have not boosted the margins, and home furnishing and décor is simply not working, he added.
“In 2016, [CEO Steven] Temares started telling us he’d made the stores more experiential to improve the shopping experience, but you wouldn’t know it if you’ve been to a Bed Bath & Beyond lately,” Cramer said.
Activist investors, who buy large amounts of a certain stock to push major changes in that company, want Temares out. A number of groups are reportedly trying to leverage their share in Bed Bath & Beyond to change the board of directors, and the stock spiked on the news last month.
The activists said that Bed Bath & Beyond lost 58% of its value during a same period that the S&P 500 has gained 342% and its retail peers increased 592%, Cramer noted.
“All of that pain is from the past five years,” he said.
To compete with Amazon’s prices for identical products, Bed Bath & Beyond is trying to lure customers to its $29 loyalty program with 20% discounts and free shipping on internet orders, Cramer said.
“This strategy has been devastating for Bed Bath’s … gross margins — what the make after the cost of goods sold — which have fallen from 40% in 2012 to under 35% in the latest quarter,” the host said.
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The banking sector will set the tone for earnings season when the group begins delivering quarterly results on Friday, Cramer said.
“The banks are the group that sets the tone for earnings season, and that’s a lucky thing because this time their stocks are coming in ice cold, which means that they should be able to rally on even the slightest positive provocation,” he said.
Investors are trying to anticipate the results, Cramer said. The Dow Jones Industrial Average shaved off about 14 points and the Nasdaq Composite lost more than 16 points. The S&P 500, however, was virtually unchanged during the session.
“The fear is palpable that earnings could be down year-over-year, but no one wants to leave the table because stocks are still the only game in town,” he said. “Even though we’ve had a real slowdown since the Fed’s last rate hike, the alternative to stocks — the bond market — once again offers only paltry returns.”
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Macy’s used its savings from 2018 tax reform to create a “path for growth,” CEO Jeffrey Gennette told CNBC.
The message came in response to Jeff Bezos’ challenge that retailers match Amazon’s employee compensation.
“We decided to put [our tax savings] back into the community of our colleagues,” Gennette told Cramer in a one-on-one interview. “Every single colleague — all 130,000 — [got] a quarterly bonus as a result of the production of that store [or] that call center.”
Bezos, Amazon founder and CEO — who is also the world’s richest man — called on competitors in his annual shareholder letter Thursday to match the company’s $15 minimum pay and benefits. Gennette said that Macy’s understands that “culture is everything” in the workplace and that the company must take care of its staff.
“This is something we are hyper-focused on,” he said.
Macy’s is also focused on transitioning its stores to reclaim patrons it lost to online shopping, such as Amazon. Gennette said it’s critical that retail stores evolve into centers where customers can spend time and not just their money.
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Sneaker collecting is a big deal and has an even bigger market. StockX, a Detroit-based company co-founded by Cleveland Cavaliers owner Dan Gilbert, Josh Luber and Greg Schwartz, brands itself as a “stock market for sneakers” where shoppers can bid on thousands of shoes, particularly limited-edition gear.
A pair of Adidas Yeezy shoes, a collaboration with rapper and fashion designer Kanye West, could sell for $200 at retail but trade for about $1,200 on the online marketplace, according to Luber, StockX’s CEO.
“We don’t know supply. The brands don’t tell us supply, but we know it was limited. And because of Kanye, demand was through the roof,” he told Cramer.
The private company, which was launched in 2015, seeks to find true supply and demand and true market value through transparency, Luber said. Goat Group, the company’s main competitor, recently scored a $100 million deal with Foot Locker.
Luber said it’s a sign that the retail and resale sectors are converging into one market.
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Cramer said there is one piece of material that taught him more about business than he learned from almost anything else in his nearly four decades of watching Wall Street: Amazon CEO Jeff Bezos’ annual letter to shareholders.
“Forget the crazy stories about his personal life. Who cares. Bezos has some serious sage wisdom, and just believe me, he’s as focused as ever,” the host said.
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In Cramer’s lightning round, the “Mad Money” host ran through his responses to callers’ stock picks of the day.
Box Inc.: “I just feel like that they’re in the penalty box. I would not own this stock here. They are slowing. Look, companies like Okta are accelerating. Companies like Box are slowing. They better do something that accelerates their growth … or it’s not gonna go anywhere.”
Senior Housing Properties Trust: “Oh, no, no. This is a bad business. This yield I do not think can be maintained. Senior citizen housing is not a good business right now.”
Forescout Technologies Inc.: “Well, you know that my favorite in that space is Palo Alto. I don’t think you need to buy anymore Forescout. You know, these stocks right now — this one’s coming in with high expectations. Let’s be careful, it is up 60%.”
Disclosure: Cramer’s charitable trust owns shares of Amazon.com.
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