Last week, Target (NYSE: TGT) slashed its fiscal 2022 guidance for the second time in less than a month. Rising inventory levels and a demand slowdown in many discretionary merchandise categories are combining to pulverize Target's profitability .
On the bright side, while 2022 will be painful for Target, the discount retail giant remains solidly profitable and should bounce back within a year or two. The same can't be said for Bed Bath & Beyond (NASDAQ: BBBY) , though. A sharp drop in home furnishings demand represents an existential threat for the troubled retail icon.
Two months ago, Bed Bath & Beyond reported awful results for the final quarter of its 2021 fiscal year. Comparable sales declined 12% year over year. Meanwhile, surging supply chain costs crushed its profitability, causing adjusted EBITDA to fall by nearly $200 million year over year, plunging into negative territory .
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Target's Bad News Is Even Worse for Bed Bath & Beyond