If you have a strong balance sheet, and you aren’t shipping out most of your profits to shareholders, you can withstand an extended period of challenging business conditions and still create shareholder value.
Even though keeping adequate cash reserves and running a business with a hyper-focus on prudence remains out of fashion, the value of financial strength occasionally reveals itself.
It comes to my mind every time I take a look at Bed Bath & Beyond (BBBY) stock. For the past ten years, the company has become yet another victim of Amazon as customers learned that they kind find the exact same home furnishings at a cheaper price than they’d get if they visited a physical Bed Bath & Beyond retail location.
That is why, even though Bed Bath & Beyond has opened an additional 700 stores and nearly doubled its store count over the past ten years, company-wide profits … Read the rest of this article!