Bed Bath & Beyond Saving

Plus: Hungry Kazakhs face an existential Big Mac Attack ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

January 6, 2023

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Good morning.

Professional wrestling’s most controversial character is hulking out.

Ousted WWE chief executive Vince McMahon is planning a return to the CEO post to guide the company through a sales process, according to The Wall Street Journal. McMahon left in 2022 after an investigation found he used WWE’s corporate coffers to pay out $14.6 million to multiple women who had alleged sexual misconduct against him over two decades. He reportedly wants to use his majority shareholder stake to remove his daughter Stephanie as CEO and take advantage of what he sees as a more favorable media landscape. Letting your company’s most controversial executive head up the sale of your entire corporation? At least they aren’t tapping a jobber.

Morning Brief

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Bed Bath & Beyond really leaning into the “Beyond.”

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Sports fans, brace yourselves for pop-ups.

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Kazakhstan won’t be “Lovin’ it” anymore.

Retail

Bed Bath & Beyond Could File for Bankruptcy

Somebody buy a few million loofahs, quick!

Bed Bath & Beyond, the home goods giant that generously accepts coupons well past their expiration dates, told shareholders Thursday that bankruptcy is now a possibility, and sources told The Wall Street Journal the company is indeed in the early stages of preparing a Chapter 11 filing. College students everywhere are shedding a tear, praying they won’t have to switch to Ikea.

The Great Beyond

Thanks to the retail chain’s reliance on a large brick-and-mortar footprint, the writing has been on the tastefully decorated wall for the past few years. The company’s relationships with suppliers are tumultuous, to say the least. In 2020, BB&B dropped selling national brand products to focus on its own private labels, but two years later they walked that back.

Retail expert Jeff Macke told The Daily Upside that BB&B trying to get vendors back onboard after kicking them out of its chain either took courage or, as he put it, “aggressive dumbness.”

BB&B has not just slipped, but plummeted, hitting every rock along the way. Adding to the quagmire are the constant shakeups among BB&B’s top brass. Last year, the company’s board forced out CEO Mark Tritton, the roles of COO and chief stores officer were eliminated, and shortly after announcing the closure of 150 stores and cutting 20% of staff, CFO Gustavo Arnal died tragically. Plus, everyone’s favorite Canadian meme entrepreneur, Ryan Cohen, leveraged the company’s meme stock popularity by taking an activist stake, sending the stock soaring before walking away with nearly $70 million months later, sending shares crashing. With all that said, it’s no wonder Chapter 11 looks like an appealing option:

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Because of lower sales and slower foot traffic, BB&B expects a record loss of $386 million in its latest quarter, a nearly 30% hit from its $276 million blow in the previous year. In 2019, the company brought in $11.3 billion, and two years later, it was down to $8.3 billion.

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On Wednesday, BB&B was valued at $2.41 a share, but after Thursday’s announcement, the stock nosedived 30% and closed at $1.68 a share, a level not seen since the company went public in 1992. MACCO Restructuring Group CEO Drew McManigle told Yahoo Finance he wouldn’t be surprised if BB&B filed for bankruptcy “as early as this weekend.”

You’ve Got Just What I Need: Bed Bath and Beyond is not the only homeware retailer that’s hit a rough patch. In its latest report, Wayfair said its active customer count dropped 23% and sales fell 9% during the third quarter compared to the same period last year. And even though Ikea is seeing good sales numbers, it still faces serious supply chain issues because of Covid lockdowns and the invasion of Ukraine. Instead of buying new, it seems like consumers might go back to the old method of picking up a free couch on the side of the road.

–Griffin Kelly

Advertising

Bank Bets on Streamed Sports Ads

(Photo Credit: franchise opportunities/Flickr)

What’s the one thing missing during a penalty kick shoot-out at the world cup, a game seven of the World Series, or a free throw in the final minute of the NBA finals? You guessed it — a pop-up ad!

Boutique bank LionTree is leading an investment group to buy a majority stake in an advertising technology company called Transmit.Live which specializes in placing ads into sports broadcasts. The move shows the bank is betting on streamers, who have plowed money into buying up sports rights and could use a little extra pocket money.

Ads to the Rescue

Big Tech titans with streaming divisions have invested heavily in sports rights over the past few years, and continue to do so. YouTube clinched a $14 billion streaming deal with the NFL in the run-up to Christmas, and The Information reported in late December that Amazon is working on a stand-alone app for watching sports. Those rights don’t come cheap, however, and tech companies are in the middle of a financial reckoning they haven’t faced before — a fact which was thrown into sharp relief on Wednesday when Amazon conceded it will cut over 18,000 jobs from its corporate workforce, 8,000 more than it had previously planned.

LionTree’s investment is based on the premise that while they are still all-in on sports broadcasting, streamers will need a revenue boost. Big Tech and targeted advertising as bedfellows? Who’d have thunk it? Transmit’s ads are programmatic, meaning they will be tailored to whoever is watching them:

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Transmit says its technology allows it to deliver personalized ads at any point during live programming, meaning they can throw up an ad during the “peaks and lulls” of a game, per the company’s press release.

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It claims its technology means ads are: “more engaging and less intrusive for publishers, advertisers, and viewers.” Viewers may not agree if an ad pops up right as their favorite athlete is about to score.

No Sweat: Although advertising is not immune to the same budgetary constraints entangling the tech companies, LionTree clearly views sports ads as a hedge in uncertain times. “Advertising always sells out in sports, even in economically difficult times,” Andrew Olinick, managing partner at LionTree’s asset-management division, told The Wall Street Journal. In other words: LeBron James is recession-proof.

–Isobel Asher Hamilton

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Trade

McDonald’s Pulls Out of Kazakhstan

The global span of the Golden Arches just got a tiny bit smaller.

McDonald’s confirmed on Thursday it’s departing from Kazakhstan just six years after breaking ground in the central Asian nation. Bloomberg reports the reason for the exit is that Kazakhstan is heavily reliant on Russia for meat imports, and Russia’s invasion of Ukraine meant McDonald’s banned local franchisees from buying up Russian burger patties, the unhappiest of meals.

No, We Won’t Be Making Any Borat Jokes

McDonald’s was one of many Western firms to impose its own sanctions on Russia after it invaded. It took the hyper-American chain a little longer than most but in May 2022, 32 years after establishing its first outpost behind the newly-lifted Iron Curtain, McDonald’s left Russia altogether. Its restaurants were hastily rebranded, so hastily in fact that photos emerged of Russian sauce packets with the McDonald’s logo scribbled out in permanent marker.

Pulling out of Kazakhstan shows how the fallout from Putin’s war is spilling out into neighboring economies. Kazakhstan was unable to revamp its beef patty supply chain to accommodate McDonald’s policy:

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Kazakhstan is the ninth-largest country in the world by surface area, and using European or local suppliers would translate to untenably high transport and freight costs, sources told Bloomberg.

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This comes shortly after McDonald’s also stripped franchise rights from its restaurants in Bosnia and Herzegovina — although that had less to do with the war than a series of scandals including unpaid rent.

Collateral damage: The same day Kazakhstan mourned the loss of Ronald McDonald the US government announced it would provide financial aid to another economy bulldozed by the war. The US will grant crisis-hit Moldova, which borders on Ukraine, $30 million. They’re lovin’ it.

–Isobel Asher Hamilton

Extra Upside

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Reinventing the wheel: Hong Kong lifts Covid ban on import of hamsters.

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Flying cars: Jeep Chrysler maker said it will pump millions into manufacturing air taxis.

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