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Struggling banker Bed Bath & Beyond (NASDAQ:BBBY) aloof appear additional division numbers that affirm that this banker continues to struggle. Additional division revenues absent expectations. So did commensurable sales, operating profits, and net profits. The full-year adviser was additionally trimmed. BBBY banal alone big in response.

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It now trades at its everyman levels aback 2000. Given the huge blast in BBBY over the accomplished several years, it feels adapted to adduce an commodity I wrote about Bed Bath & Beyond banal aftermost year. In that article, I wrote the following:

Lets go aback to the acceptable old abstain test.

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If it looks like a duck, swims like a duck, and quacks like a duck, again it apparently is a duck.

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BBBY banal is a asleep duck.

At that point in time, BBBY was trading about $23. Today, it changes easily at $15. The numbers accept alone attenuated aback a year ago, and defalcation looks like a absolute achievability for this aggregation if things don’t turnaround soon.

In added words, BBBY banal is added of asleep abstain today than it was a year ago. In investing, it is a acceptable aphorism of deride to abstain affairs asleep ducks. As such, the acute move actuality is to abstain BBBY for the accountable future.

The adventure at Bed Bath & Beyond is appealing simple. The aggregation is accepting awkward out of the retail game.

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When ecommerce came across-the-board through and afflicted the accomplished the retail landscape, the better of those changes was the addition of assorted new e-retail players with whom acceptable retailers had to compete.

Some acceptable retailers adapted by architecture out omni-channel business capabilities, ablution clandestine characterization brands, absorption on in-store experiences, acumen absolute estate, so on and so forth. Others didn’t, and they suffered. That is the attributes of competition.

Bed Bath & Beyond is one of the retailers that didn’t adjust, and as a result, the aggregation is gradually actuality awkward out of the retail game. Shoppers are abrogation Bed Bath & Beyond food en masse.

Because there is annihilation different or acute about the Bed Bath & Beyond amount prop, all those shoppers abrogation Bed Bath & Beyond food are activity to a countless of e-retail appliance shops, including Amazon (NASDAQ:AMZN), Wayfair (NYSE:W) and Houzz.

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In added words, anybody is abrogation BBBY stores. And alone a atom of those abrogation the food are axis into BBBY ecommerce customers. That is a answerable compound for poor BBBY banal performance. This is absolutely what we saw with both Sears (NASDAQ:SHLD) and J.C. Penney (NYSE:JCP), two stocks on their way to the retail graveyard.

Granted, BBBY isn’t abounding by as abundant debt as Sears or JCP. But, BBBY does accept added debt than banknote on its antithesis sheet, and with crumbling EBITDA, advantage is acceptable a concern. Thus, so continued as operations abide depressed, the affairs of BBBY afterward in the footsteps of Sears and JCP are absolutely high.

The “buy the dip” apriorism on BBBY banal hinges on the abstraction that the banal is bargain here. Antithesis are declared to appear in $2 per allotment this year. BBBY banal trades easily at $15. Thus, the banal is trading at 7.5X this year’s earnings, which seems bloodless for any stock.

But, advance is about attractive forward, not back. If you attending advanced on BBBY stock, you will see this banal isn’t cheap.

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Comparable sales advance has been negative, is negative, and will abide abrogating because this aggregation is accepting awkward out of the retail game. Meanwhile, gross margins accept collapsed from over 40% a few years aback to beneath 34% today, and are assuming no signs of stabilizing. The opex amount has risen from beneath 25% a few years aback to 31% today and is additionally assuming no signs of stabilizing.

Thus, you accept a bearings authentic by agilely abrogating commensurable sales growth, acerbic gross margins, and a abscess opex rate. If you put all three of those together, you get accumulation declines. And, not aloof slight accumulation declines. Big accumulation declines. In budgetary 2015, antithesis were aloft $5 per share. This year, antithesis will appear in at $2 per share.

This abrasion won’t stop. Realistically speaking, I absolutely anticipate antithesis accept downside to about $1 per allotment over the aing several years. In that scenario, this banal is far from bargain here, abnormally because the debt on the antithesis sheet.

BBBY banal is a asleep duck. There is no added way to put it. Until this aggregation shows some signs of an operational turnaround, the best acceptable aisle advanced for this banal is to chase in the footsteps of JCP and Sears. That is a aisle that investors don’t appetite to follow.

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As of this writing, Luke Lango was continued AMZN.

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The column Bed Bath & Beyond Banal Very Well Could Be a Asleep Abstain appeared aboriginal on InvestorPlace.

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