storewanderer wrote: ↑March 19th, 2023, 9:07 pm
ClownLoach wrote: ↑March 19th, 2023, 8:57 pm
It seems in the desperate search for cash the company has liquidated most, if not all, of the newest prototype and remodeled stores. There is nothing in common in the remaining open stores that I can identify in my market. So if they were to get down to 200 stores they'll still have the same problematic hodge-podge of mismatched small, large, old and new stores that all require some form of capital investment. This is why I am assuming that there is no go forward plan for the BB&B stores. Some of these stores finished remodeling in November and began liquidation in December. It's complete chaos and newly remodeled stores in high visibility/high traffic locations closing is a sign of desperation. I read some BB&B employees arguing on Reddit that this is a good thing somehow and that just because a store is busy and has a lot of sales doesn't mean it's a profitable store... If their model is so broken that the highest volume stores aren't the most profitable (meaning they do not have any cost leverage as an organization) then they need to just pull the plug. The fact they employ leaders who have such little understanding of business acumen such as the concept of leverage is frightening.
That is the same logic that was applied in the Kmart bankruptcy 20 years ago. Why are so many stores in 10-15 year old buildings in growing/safe suburbs closing while 35 year old stores in bad neighborhoods are staying open? Oh, because those newer stores had high cost leases oh and those leases even had escalation clauses (presented to employees as if that was some kind of an odd/extraordinary thing in leases.. it isn't) so results would get harder and harder in the future to achieve... so they were not as profitable as the old stores... and forecasted to be even less profitable in the future.
There are obviously fluke situations where a busy store is not profitable (like those super high theft Wal Marts) but that should not be the norm.
I'm not sure what is up with those BBB employees on Reddit. Is it a bunch of store managers or middle managers who actually think that somehow this operation has a chance long term? From what I read there I get the impression they have cut all but management down to part time status and many long tenured employees have been let go.
The thing is that BB&B stores are not really very large and are all about the same age. They grew very fast and then seemed to hit a wall. So their leases shouldn't be that far apart in cost. My experience with similar footprint stores in similar centers across a large territory is that there is no more than about a $5K range from lowest to highest rent. There possibly could have been leverage problems at a couple of larger higher rent outliers like the flagship two story megastore by LAX (massively remodeled 2021, liquidated late 2022), but the traffic there should have made it work (next to the #1 volume Costco in California). I do not believe that rents should have played a part in 99% of the closures.
For fun, apparently the store level P&L is kept under lock and key at BB&B. Only upper management had access to the actual profitability of stores. The SM had no idea. This should be another Gigantic red flag, just like the nonsensical choices of go forward locations.
I totally understand what happened to Kmart where they were a fleet of old, cheap, and old again stores from the 70s then they tried to lease a bunch of newer larger format stores in more expensive areas in the late 90s. They really needed a completely different format to make the newer/more expensive buildings work financially but they were basically selling all the same old Kmart junk (plus Fleming groceries in Super Ks) so the customers of the newer/better/more expensive areas rejected them in droves.
I do not feel that BB&B is comparable; the majority of their fleet all opened in the same 10 year window of mid 90s to mid 00s.
Newer, more focused category killers like BB&B have all been built on the same model of deep buying power and economy of scale. The model was the oldest and most established/most dense markets will be the bread and butter of the company delivering the most volume and fattest operating profit margin. Then they can leverage the profits to venture out into smaller/newer areas and be there as they grow (or leave if they flounder) because they are backstopped by the core fleet. In looking at the closures, I see those core bread and butter stores closed, stores again that were sometimes just a few weeks out of their remodel, and outer fringe market stores kept which appear to be in newer/likely more expensive centers. It makes no sense at all, and again if their model was so screwed up that there isn't any leverage as volume grows then that's why they're teetering on bankruptcy.
The Reddit thing seems to be mostly stock shills pretending to be working there and talking about how fantastic everything is and how much money the shareholders are going to rake in when the stock goes to the moon, and then the few managers who frankly can't get another job elsewhere or they would have already run for the hills. These folks make some of the strangest arguments I've ever read, and seem to be force fed horse manure right from the corporate office's barn. They're being told wacky things at the stores like "any lease can be canceled cost free as long as you just abandon the store and send back the keys" and "there is a clear path to profitability with the hand selected go forward stores" and "we only closed money losing, low volume stores." We all know you can't just walk away from Long term leases, they didn't seem to have enough cash from the ape stock bailout to last a quarter at their recent rate of cash burn, there is very little merchandise in the stores and customers aren't buying because they are waiting for a perceived going out of business sale to begin, and finally it is very obvious when the busiest flagships in the best centers close while the crummy location next to a closed Kmart is kept clearly different criteria were used in site selection (like amount of inventory on hand for highest up front cash return from liquidators). I mainly read it because it's like a train wreck, you can't look away from the stupid nonsense being posted.