Have you ever heard of a caveman who lived alone? No, those guys lived in tribes. Admittedly that was for survival, but like wolves, we are pack animals.
So?! It means that from the days of Blockbuster, and today with endless Netflix choices, people still do enjoy “gathering” at the movies, and Blockbuster, in fact, did go bust! In the retail investment world that means its not just about Amazon or stores like Home Depot and Costco that dominate a category that doesnt fit the internet economy.
Six months ago I was in the Trumbull Mall Macy’s in Ct. It was death warmed over. Then walked into Target. It was exciting, entertaining, full of life and also chock full of things that enticed me to buy.
The first Japanese hibachi steak house in America was called Benihana of Tokyo. As all of us who attended Harvard Business School can attest, the lesson of the Benihana case was that the founder, Rocky Aoki, understood that his real business was entertainment, that was a winning formula coupled with good food. Going to Benihana's was always a fun experience.
I’ve known Target’s success and Macy’s failure but still wasn’t motivated to buy Bed Bath and Beyond when I heard about BBBY’s brilliant choice of Mark Tritton as CEO, former head of merchandising at TGT. Well, that is until I learned a thing or two from Jim Cramer last nite, and quickly started a position at $12.54.
I learned that Mark is mostly getting paid in stock; that the company’s market cap is only $1.5 billion; that it is in fact profitable; has lots of cash; a low PE, and that the dividend is north of 6%. Yes it is true that enterprise value is $4 billion or so... but apparently the debt is comfortably manageable.
But it was my experience at Target that Mark will bring to BBBY, coupled with the idea that by owning the stock, so far below its historic high I am riding in the same chariot with merchandising Master, Mark Tritton, that enticed me to buy last nite. Shopping at lively and dynamic Target is, like eating at Benihana, entertaining, and fun and is so well merchandised that shopping is fully satisfying, as is the food at Rocky Aoki's establishment.
This is what the market expects, and I too expect, Mark to bring to Bed Bath and Beyond. The footprint is excellent and the foundation is there, and BBBY is ready for Mark's merchandising excitement and the concomitant quality management and excellent service that made Benihana, and later Target, successful.
And yes, we are human. We are gatherers. We do have the need to go out and be amongst others of our species. And just because we buy lots of stuff on Amazon, there is room, indeed the innate need, for humans to associate physically with others, and even more so when excited and entertained especially when they have the excuse of shopping and proactively buying things on their shopping list.
I’m buying more BBBY!