Summary: Bed Bath And Beyond

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I recommend that Bed Bath & Beyond (BBBY) should use the debt with 47% debt and they should repurchase its shares. In addition, BBBY should consider their investors and they should pay dividend after second year in financial project, because no investors want to see all cash in the company’s book. The paying dividend will make more attractive BBBY for investors. Moreover, they should develop an innovative strategy which based on e-commerce market. E-commerce will provide competitive advantage against local rivals and the profitability of BBBY will increase. As a result of this will be expected an improvement per share around 4.26$ and the target stock price will be $41.26 per share in year 2004. After five years, financial …show more content…
As we see, the consumption of furnishing increased from 2000 to 2004. It is good time to develop a new sustainable strategy.

Exhibit 1: Home furnishing consumer spending in billion $

Exhibit 2 shows us the home price index in USA between 2000 and 2004. The index increased and the anticipation of economy is high demand of home buying so that there is an excellent opportunity for BBBY.

Exhibit 2: Home Price Index Why we considered the e-commerce market in the rationale decision, e-commerce market has an uptrend and BBBY should take advantage of this situation, because BBBY has large physical stores which was leased. By e-commerce market strategy can be improved return on capital and profitability of company.

Exhibit 3: E-commerce Sales

The economy has a long term growing trend in factors. The development of the economy makes demand of materials and services. We will use the discount factor for Net Present Value at 8.89%. I assume that the given discount rate is feasible. This discount factor calculation is below:

Exhibit 4: Discount Factor
Discount Factor
Five-year Treasury Note: 2.79%
Corporate Bond Rates for BBB Rating
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