Bombay's Downward Spiral (BBA)

The Bombay Company (BBA) sneaks out a very late press release Wednesday evening with more bad news and invites everyone to the conference call Thursday morning, mitigating bad news with a schoolboy trick to avoid investor questions.

Bomay's declining sales and a huge inventory mean negative cash flow and increasing reliance on bank debt. Is there even time left to save this one?

BBA 1-yr chart:

Comments

[koreanjohn32:]

Bombay's failure is a failure in it's overall vision. Historically, Bombay has promoted its buyers into higher positions and kept it's design team subject to the whims of individual buyers. Rather than create an overall design strategy, this resulted in a hodge-podge, value-basement look.

Design and design vision married with strong business sense is the key component behind all the successful home decor houses. Bombay had strong market share when there was nobody else in that market. However, with the rise of Target and other discount home decor houses (including Walmart), Bombay's lack of vision and overall design strategy became obvious. Rather than fix the core issue within and resolve their philosophical approach, they resorted to promotional gimmicks which kept sales afloat but without any long-term, brand-building objectives.

The fact is that they did have time to correct the issues, but nobody really wanted to face the music. Other than someone coming in and "cleaning house," the existing, stagnant organization is not going to be able to recover. Bombay is in dire need of fresh blood, albeit a bit autocratic in approach. Someone with strong vision and the ability to execute it quickly.

2007 Jul 17 01:57 PM