Bed Bath and Beyond enjoys meme stock resurgence

Investors in Bed Bath & Beyond have new reason to rejoice: the stock has surged more than 50% during trading Wednesday, following a wave of upbeat announcements that ushered in the launch of a digital marketplace, a partnership with the grocery chain Kroger, and a $1 billion share buyback program that is running well ahead of schedule.

The swift ascent on Wall Street marks a resurgence for the big-box retailer, which attracted the excitement of retail investors earlier this year, as part of a rush of so-called meme stock trading, driven by impassioned posts on online forums.

After reporting lackluster earnings in September, owing to a drop-off in shopper traffic, and suffering through supply chain disruptions, Bed Bath & Beyond’s shares tanked, dragging investors down to the lowest share price seen this year. But the turnaround appeared just as swiftly as the tumble. Shares closed Wednesday at $19.30, up $2.55 or about 15% for the day.

Investors appeared to embrace the company's latest moves, described by executives as part of a business transformation. Bed Bath & Beyond plans to expand its online offerings of key home goods and baby products from third-party sellers. Popular items from the company - including baby furniture, bedding and storage - will also be made available through Kroger's website, and in some of the grocer's physical stores, as part of a small-scale pilot, Bed Bath & Beyond said, placing the products in front of food shoppers.

"This strategic online collaboration and in-store pilot will provide Kroger shoppers easy access to essential home and baby products alongside their favorite grocery staples," said Rodney McMullen, Kroger's chairman and chief executive, in a statement Tuesday.

In addition to the digital expansion and Kroger partnership, Bed Bath & Beyond said it expects to complete its three-year share repurchase plan two years ahead of schedule.

Mark Tritton, Bed Bath & Beyond's president and chief executive, said the buyback announcement "further underscores our ongoing confidence in our turnaround, and our ability to simultaneously generate positive cash flow, maintain a strong balance sheet and invest in our long-term growth, all while returning significant capital to shareholders," according to a statement.

The positive news that appeared to spark the price run coincided with other meme stock gains. AMC Entertainment and GameStop both enjoyed modest increases Wednesday afternoon, rising 5.16% and 5.48%, respectively.

The market overall was nearly unchanged, as investors digested the news that the Federal Reserve will start winding down its vast support for the markets this month, marking a highly-anticipated policy change, while Fed leaders also flagged that supply chain issues are causing "sizable price increases in some sectors."

Fed Chair Jerome H. Powell plans to appear at a news conference later Wednesday afternoon, as market observers wrestle with broader uncertainty tied to the labor market, the future of the nation's economic growth and the trajectory of the coronavirus pandemic.

Bed Bath & Beyond's climb marks the latest bout in the meme stock frenzy. The companies, which included GameStop, AMC and Blackberry, were thrust to the center of a buying mania earlier this year, as retail investors sought to capitalize on bets against the companies and a whirlwind of momentum and heightened attention. For a brief period, the meme stocks shot up in price, achieving staggering gains. Bed Bath & Beyond was trading at about $18 at the beginning of the year, and then nearly tripled, soaring to a peak of $53 in late January.

But almost 10 months later, the eye-popping price charts tell a more mixed story, as the stocks fell back down to earth. Even with Bed Bath & Beyond’s November comeback, the company’s share price has been cut by more than half from its January high.