Amazon.com, Inc. (AMZN) may be the biggest beneficiary of Bed, Bath & Beyond Inc.'s (BBBY) shortcomings, according to analysts and investors.
Amazon rose 1.9% as Bed Bath & Beyond falls swiftly, losing 21.5% as of 1:32 p.m. in New York.
Pricing Problems
KeyBanc Capital Markets analyst Bradley Thomas identified Amazon's ability to undercut Bed Bath & Beyond as a direct funnel from bed Bath & Beyond stores to Jeff Bezos.
His team discovered that the pricing difference is evident even with coupons that have been blamed for shrinking margins at the Union, New Jersey-based retailer.
"For customers who compare the prices from BBBY emails against Amazon, the findings were generally in Amazon's favor," the research published on Thursday morning reveals.
The online price problem also represents an increasing issue as e-commerce becomes a larger part of the retailers revenue.
According to eMarketer data, e-commerce sales make up 18.3% of the retailer's total sales revenue, up from 14.3% in the third quarter of 2017. The effect of the increase in online sales has had the further effect of decreasing store traffic, which has been reflected in disappointing same-store sales figures in recent quarters.
"The [retail] business is moving online," Jan Rogers Kniffen, president of retail investment consultancy J Rogers Kniffen Worldwide Enterprises, told Real Money this morning. "As long as that continues to head online, Amazon is going to win."
Amazon is winning enough to even brick and mortar locations, most recently in New York's SoHo neighborhood, which must only rub salt in the wound they helped create.
$AMZN is curating choices while $BBBY tries to figure out how to stuff every crap impulse item on the Internet into its stores.
"Curating" is a big thing. That's also kind of surprising but makes sense after the fact. (HT @talktoskirt ) https://t.co/Y4BppzF37O
- Jeff Macke (@JeffMacke) September 27, 2018
Playing Catch-up
Experts were pessimistic on Bed Bath & Beyond's ability to close the competitive gap between the two companies.
Chuck Wade, a vice president at the Rochester-based wealth management firm Brighton Securities, was pessimistic on Bed Bath & Beyond's turnaround with the likes of Amazon.
"Bed, Bath & Beyond -- it's not getting better," he said on Thursday. "I can't see how they can compete with Amazon [or] Walmart Inc (WMT) without significant changes - and soon."
Jim Cramer, TheStreet founder and portfolio manager of the Action Alerts Portfolio, has expressed his own doubts about a turnaround.
He has gone as far as to call company executives "completely out of touch with their own company" and dubbed the company "a dinosaur living in the ice age."
So, as Amazon continues to soar in the trillion dollar range, it might be ready to clean the carcass of one more dinosaur in Bed Bath & Beyond.
