Bed Bath & Beyond's biggest problem, according to Goldman's top retail analyst

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Goldman Sachs analyst Kate McShane is sticking with her $2 price target on struggling home goods retailer Bed Bath & Beyond (BBBY), which assumes a 75% crash in the stock from current levels.

McShane's biggest concern — among many — is Bed Bath & Beyond winning back enough customers to help foster a sustainable turnaround.

"They need to get the customer back into the store," McShane said during Yahoo Finance Live's exclusive coverage of the 29th annual Goldman Sachs retail conference on Wednesday.

To be sure, Bed Bath & Beyond remains an entity in serious flux.

The retailer announced this week its chief accounting officer, Laura Crossen, would take over as CFO. The decision comes after the tragic suicide last week of its one-time CFO, Gustavo Arnal.

Meantime, the company revealed drastic steps last week to raise cash ($500 million in debt plus a potential 12 million share sale), cut expenses (close 150 stores and lay off 20% of its workforce), and alter the sales trajectory by shaking up the executive leadership for its Bed Bath & Beyond and buybuy Baby brands.

People walk out of a Bed Bath & Beyond amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., January 27, 2021. REUTERS/Carlo Allegri
People walk out of a Bed Bath & Beyond amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., January 27, 2021. REUTERS/Carlo Allegri (Carlo Allegri / reuters)

But Wall Street analysts such as McShane think the retailer's outlook remains highly uncertain.

The main concern is that Bed Bath & Beyond's poor performance — same-store sales fell 26% in the most recent quarter — and its weak balance sheet are forcing the company to raise even more cash in 2023. Where and when (and at what cost) that cash comes from is a great unknown.

"It has been a challenging couple of weeks for Bed Bath & Beyond," McShane said. Still, she said it's somewhat encouraging the company has a "plan to survive."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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