Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Bed Bath & Beyond Inc., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-02-26), 10-K (reporting date: 2021-02-27), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-03-02), 10-K (reporting date: 2018-03-03), 10-K (reporting date: 2017-02-25).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= -301,295 – 10.59% × 3,288,320 = -649,561
Between February 2017 and February 2022, the company experienced persistent value destruction, as evidenced by consistently negative economic profit. Despite fluctuations in operating performance and a significant reduction in the capital base, the entity failed to generate returns exceeding its cost of capital throughout the analyzed period.
- Net Operating Profit After Taxes (NOPAT)
- A volatile and generally downward trend is observed in NOPAT. After a peak of US$ 935,216 thousand in 2017, performance declined significantly, entering negative territory by 2019. A severe low was reached in 2020 with a loss of US$ 522,990 thousand. Although a brief recovery occurred in 2021 with a positive NOPAT of US$ 98,133 thousand, the trend reversed in 2022, resulting in a loss of US$ 301,295 thousand.
- Invested Capital
- A consistent and steep contraction in invested capital is evident. The capital base declined every year, moving from US$ 6,680,896 thousand in 2017 to US$ 3,288,320 thousand in 2022. This represents a reduction of approximately 50% of the total invested capital over the six-year duration, suggesting a systematic downsizing of the asset base or significant divestments.
- Cost of Capital and Economic Profit
- The cost of capital exhibited instability, peaking at 16.15% in 2017 and reaching a minimum of 8.32% in 2020. Regardless of these fluctuations, economic profit remained negative for the entire period. The most significant value destruction occurred between 2019 and 2020, where economic profit losses reached US$ 749,757 thousand and US$ 947,109 thousand, respectively. The inability to achieve a positive economic profit indicates that the operating returns were consistently insufficient to cover the weighted cost of the capital employed.
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Net Operating Profit after Taxes (NOPAT)
Bed Bath & Beyond Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-02-26), 10-K (reporting date: 2021-02-27), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-03-02), 10-K (reporting date: 2018-03-03), 10-K (reporting date: 2017-02-25).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in accrual for severance and related costs.
3 Addition of increase (decrease) in equity equivalents to net earnings (loss).
4 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,854,508 × 6.00% = 111,270
5 2022 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 175,972 × 21.00% = 36,954
6 Addition of after taxes interest expense to net earnings (loss).
An analysis of financial performance from February 2017 to February 2022 reveals a substantial deterioration in both net earnings and net operating profit after taxes (NOPAT), indicating a severe erosion of profitability over the observed six-year period.
- Net Earnings Trajectory
- Net earnings experienced a consistent downward trend, starting at 685,108 thousand US$ in 2017 and decreasing to 424,858 thousand US$ in 2018. A critical shift occurred in 2019, marking the beginning of a period of sustained losses. These losses peaked at 613,816 thousand US$ in 2020 and remained negative through 2022, ending at a deficit of 559,623 thousand US$.
- NOPAT Volatility and Operating Performance
- NOPAT followed a similar downward trajectory initially, falling from 935,216 thousand US$ in 2017 to 735,312 thousand US$ in 2018, before collapsing into negative territory in 2019 and 2020. A brief recovery was observed in February 2021, where NOPAT returned to a positive value of 98,133 thousand US$. However, this improvement was temporary, as the figure reverted to a loss of 301,295 thousand US$ by February 2022.
- Correlation Between Operating Profit and Net Income
- A notable divergence occurred during the 2021 fiscal period. While NOPAT indicated a return to positive operating profitability, net earnings remained negative at -150,773 thousand US$. This suggests that while core operating activities were momentarily profitable after taxes, non-operating expenses or financing costs outweighed these gains, preventing the operating recovery from translating into overall net profitability.
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Cash Operating Taxes
Bed Bath & Beyond Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-02-26), 10-K (reporting date: 2021-02-27), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-03-02), 10-K (reporting date: 2018-03-03), 10-K (reporting date: 2017-02-25).
The financial trajectory regarding tax obligations reflects a significant transition from substantial cash outflows to tax benefits over the six-year period ending February 26, 2022. There is a pronounced downward trend in both accounting tax provisions and actual cash tax payments, indicating a fundamental shift in the entity's taxable income and liquidity profile.
- Provision for Income Taxes Trends
- A consistent decline in tax provisions is observed from February 2017, where the provision stood at 380,547 thousand US$, to a peak benefit of -185,989 thousand US$ by February 2021. The transition from a provision to a tax benefit occurred in March 2019 and persisted for three consecutive years, suggesting the utilization of deferred tax assets or the realization of operating losses. A return to a positive provision of 86,967 thousand US$ in February 2022 indicates a reversal of this trend, although the amount remains significantly below the levels seen in 2017 and 2018.
- Cash Operating Taxes Analysis
- Cash tax payments exhibited a more aggressive decline than accounting provisions. Starting at 355,672 thousand US$ in February 2017, cash operating taxes decreased steadily through February 2020, reaching 37,797 thousand US$. This trend culminated in a significant shift to negative values, specifically a cash inflow of 294,013 thousand US$ in February 2021 and -3,389 thousand US$ in February 2022. These negative values represent cash refunds or tax recoveries rather than expenditures.
- Convergence and Divergence of Tax Metrics
- In the early period (2017-2018), cash operating taxes closely mirrored the income tax provisions, suggesting a high correlation between accrued expenses and actual cash settlements. However, a divergence emerged between 2019 and 2022. The most notable variance occurred in February 2021, where the cash benefit exceeded the accounting benefit by over 108 million US$. Furthermore, by February 2022, a discrepancy is observed where the accounting provision returned to a positive value (86,967 thousand US$) while the cash operating taxes remained negative (-3,389 thousand US$), indicating that the accounting expense did not result in an immediate cash outflow.
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Invested Capital
Bed Bath & Beyond Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2022-02-26), 10-K (reporting date: 2021-02-27), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-03-02), 10-K (reporting date: 2018-03-03), 10-K (reporting date: 2017-02-25).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of accrual for severance and related costs.
4 Addition of equity equivalents to shareholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of investment securities.
A consistent and significant reduction in total invested capital is observed from February 2017 through February 2022. The total invested capital decreased from approximately 6.68 billion US dollars to 3.29 billion US dollars, representing a total contraction of roughly 50% over the analyzed period.
- Debt and Lease Obligations
- Total reported debt and leases followed a general downward trajectory, falling from 4.19 billion US dollars in 2017 to 3.07 billion US dollars by 2022. Although a marginal increase was noted in 2020, the overall trend indicates a reduction in leveraged obligations, though this decline is less aggressive than the erosion of equity.
- Shareholders' Equity Erosion
- Shareholders' equity experienced a severe and accelerating decline. After reaching a peak of approximately 2.89 billion US dollars in 2018, the value dropped precipitously to 174.1 million US dollars by February 2022. This represents a near-total depletion of the equity base, with the most significant losses occurring between 2019 and 2022.
- Capital Structure Shift
- The composition of invested capital shifted fundamentally over the six-year period. In 2017, shareholders' equity accounted for approximately 40% of the total invested capital. By 2022, the equity portion collapsed to approximately 5% of the total, leaving the company's invested capital base almost entirely dependent on debt and lease obligations.
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Cost of Capital
Bed Bath & Beyond Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,304,680) | 1,304,680) | ÷ | 4,153,129) | = | 0.31 | 0.31 | × | 24.03% | = | 7.55% | ||
| Long term debt and finance lease liabilities3 | 993,941) | 993,941) | ÷ | 4,153,129) | = | 0.24 | 0.24 | × | 4.89% × (1 – 21.00%) | = | 0.92% | ||
| Operating lease liability4 | 1,854,508) | 1,854,508) | ÷ | 4,153,129) | = | 0.45 | 0.45 | × | 6.00% × (1 – 21.00%) | = | 2.12% | ||
| Total: | 4,153,129) | 1.00 | 10.59% | ||||||||||
Based on: 10-K (reporting date: 2022-02-26).
1 US$ in thousands
2 Equity. See details »
3 Long term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 2,883,014) | 2,883,014) | ÷ | 5,870,842) | = | 0.49 | 0.49 | × | 24.03% | = | 11.80% | ||
| Long term debt and finance lease liabilities3 | 1,118,000) | 1,118,000) | ÷ | 5,870,842) | = | 0.19 | 0.19 | × | 4.76% × (1 – 21.00%) | = | 0.72% | ||
| Operating lease liability4 | 1,869,828) | 1,869,828) | ÷ | 5,870,842) | = | 0.32 | 0.32 | × | 6.40% × (1 – 21.00%) | = | 1.61% | ||
| Total: | 5,870,842) | 1.00 | 14.13% | ||||||||||
Based on: 10-K (reporting date: 2021-02-27).
1 US$ in thousands
2 Equity. See details »
3 Long term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 833,985) | 833,985) | ÷ | 4,345,726) | = | 0.19 | 0.19 | × | 24.03% | = | 4.61% | ||
| Long term debt and finance lease liabilities3 | 1,229,953) | 1,229,953) | ÷ | 4,345,726) | = | 0.28 | 0.28 | × | 5.10% × (1 – 21.00%) | = | 1.14% | ||
| Operating lease liability4 | 2,281,788) | 2,281,788) | ÷ | 4,345,726) | = | 0.53 | 0.53 | × | 6.20% × (1 – 21.00%) | = | 2.57% | ||
| Total: | 4,345,726) | 1.00 | 8.32% | ||||||||||
Based on: 10-K (reporting date: 2020-02-29).
1 US$ in thousands
2 Equity. See details »
3 Long term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 2,207,212) | 2,207,212) | ÷ | 5,997,254) | = | 0.37 | 0.37 | × | 24.03% | = | 8.85% | ||
| Long term debt and finance lease liabilities3 | 1,491,734) | 1,491,734) | ÷ | 5,997,254) | = | 0.25 | 0.25 | × | 4.83% × (1 – 21.00%) | = | 0.95% | ||
| Operating lease liability4 | 2,298,308) | 2,298,308) | ÷ | 5,997,254) | = | 0.38 | 0.38 | × | 5.68% × (1 – 21.00%) | = | 1.72% | ||
| Total: | 5,997,254) | 1.00 | 11.51% | ||||||||||
Based on: 10-K (reporting date: 2019-03-02).
1 US$ in thousands
2 Equity. See details »
3 Long term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 2,455,448) | 2,455,448) | ÷ | 6,483,594) | = | 0.38 | 0.38 | × | 24.03% | = | 9.10% | ||
| Long term debt and finance lease liabilities3 | 1,496,578) | 1,496,578) | ÷ | 6,483,594) | = | 0.23 | 0.23 | × | 4.83% × (1 – 32.66%) | = | 0.75% | ||
| Operating lease liability4 | 2,531,568) | 2,531,568) | ÷ | 6,483,594) | = | 0.39 | 0.39 | × | 5.34% × (1 – 32.66%) | = | 1.40% | ||
| Total: | 6,483,594) | 1.00 | 11.26% | ||||||||||
Based on: 10-K (reporting date: 2018-03-03).
1 US$ in thousands
2 Equity. See details »
3 Long term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 5,713,251) | 5,713,251) | ÷ | 9,912,689) | = | 0.58 | 0.58 | × | 24.03% | = | 13.85% | ||
| Long term debt and finance lease liabilities3 | 1,496,703) | 1,496,703) | ÷ | 9,912,689) | = | 0.15 | 0.15 | × | 4.83% × (1 – 0.00%) | = | 0.73% | ||
| Operating lease liability4 | 2,702,735) | 2,702,735) | ÷ | 9,912,689) | = | 0.27 | 0.27 | × | 5.76% × (1 – 0.00%) | = | 1.57% | ||
| Total: | 9,912,689) | 1.00 | 16.15% | ||||||||||
Based on: 10-K (reporting date: 2017-02-25).
1 US$ in thousands
2 Equity. See details »
3 Long term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Bed Bath & Beyond Inc., economic spread ratio calculation, comparison to benchmarks
| Feb 26, 2022 | Feb 27, 2021 | Feb 29, 2020 | Mar 2, 2019 | Mar 3, 2018 | Feb 25, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | (649,561) | (503,885) | (947,109) | (749,757) | (2,747) | (143,852) | |
| Invested capital2 | 3,288,320) | 4,261,005) | 5,094,957) | 5,788,203) | 6,556,645) | 6,680,896) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -19.75% | -11.83% | -18.59% | -12.95% | -0.04% | -2.15% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Amazon.com Inc. | -21.72% | -1.96% | — | — | — | — | |
| Home Depot Inc. | 21.37% | 12.21% | — | — | — | — | |
| Lowe’s Cos. Inc. | 21.63% | 9.18% | — | — | — | — | |
| TJX Cos. Inc. | 4.25% | -12.60% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-02-26), 10-K (reporting date: 2021-02-27), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-03-02), 10-K (reporting date: 2018-03-03), 10-K (reporting date: 2017-02-25).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -649,561 ÷ 3,288,320 = -19.75%
4 Click competitor name to see calculations.
The financial performance from February 2017 to February 2022 reflects a persistent failure to generate economic value, characterized by consistent negative economic profit and a deteriorating economic spread ratio.
- Economic Profit Trends
- Economic profit remained negative throughout the entire period, indicating that returns consistently failed to exceed the cost of capital. A brief narrowing of losses occurred in March 2018, with economic profit reaching -2.7 million USD. However, this was followed by a severe decline, with losses peaking at -947.1 million USD in February 2020. While there was a partial recovery in February 2021, the trend reversed again by February 2022, ending at -649.6 million USD.
- Invested Capital Trajectory
- A continuous downward trend is observed in invested capital, which decreased from 6.68 billion USD in February 2017 to 3.29 billion USD in February 2022. This represents a total reduction of approximately 50.7% over the six-year span, signaling a significant contraction in the capital base employed by the organization.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative for all reported periods, confirming that the return on invested capital was lower than the weighted average cost of capital. The ratio reached its most favorable point in March 2018 at -0.04%, but subsequently deteriorated sharply. The spread plummeted to -18.59% in February 2020 and reached its lowest point of -19.75% in February 2022. This deepening negative spread indicates an increasing inability to generate sufficient returns relative to the cost of the capital utilized.
The synthesis of these metrics reveals a period of sustained value erosion. The simultaneous decline in invested capital and the widening of the negative economic spread ratio suggest that the contraction of the asset base was not accompanied by an improvement in capital efficiency, leading to a persistent destruction of shareholder value.
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Economic Profit Margin
Bed Bath & Beyond Inc., economic profit margin calculation, comparison to benchmarks
| Feb 26, 2022 | Feb 27, 2021 | Feb 29, 2020 | Mar 2, 2019 | Mar 3, 2018 | Feb 25, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | (649,561) | (503,885) | (947,109) | (749,757) | (2,747) | (143,852) | |
| Net sales | 7,867,778) | 9,233,028) | 11,158,580) | 12,028,797) | 12,349,301) | 12,215,757) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -8.26% | -5.46% | -8.49% | -6.23% | -0.02% | -1.18% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Amazon.com Inc. | -11.34% | -0.84% | — | — | — | — | |
| Home Depot Inc. | 6.79% | 4.60% | — | — | — | — | |
| Lowe’s Cos. Inc. | 5.88% | 2.91% | — | — | — | — | |
| TJX Cos. Inc. | 1.73% | -8.77% | — | — | — | — | |
Based on: 10-K (reporting date: 2022-02-26), 10-K (reporting date: 2021-02-27), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-03-02), 10-K (reporting date: 2018-03-03), 10-K (reporting date: 2017-02-25).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × -649,561 ÷ 7,867,778 = -8.26%
3 Click competitor name to see calculations.
The financial performance from February 2017 to February 2022 is characterized by a consistent failure to generate economic value and a sustained contraction in top-line revenue.
- Net Sales Trajectory
- Revenue remained relatively stable between February 2017 and March 2019, hovering around 12 billion USD. A definitive downward trend began in February 2020, with net sales declining to 11.16 billion USD and continuing to deteriorate to 7.87 billion USD by February 2022. This represents a substantial erosion of the revenue base over the final three years of the period.
- Economic Profit Trends
- Economic profit remained negative across all reported periods, indicating that the company consistently failed to earn a return above its cost of capital. A momentary improvement occurred in March 2018, where losses narrowed to 2.75 million USD. However, this was followed by a severe decline, with economic losses widening to a peak deficit of 947.11 million USD in February 2020 and remaining heavily negative through February 2022.
- Economic Profit Margin Analysis
- The economic profit margin reflects extreme volatility and a persistent inability to achieve value creation. After nearly reaching a break-even point of -0.02% in 2018, the margin plummeted to -8.49% by February 2020. While a partial recovery to -5.46% was observed in February 2021, the margin regressed to -8.26% by February 2022. The synchronization of declining net sales and widening negative margins underscores a deteriorating capital efficiency profile.
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