The Bed Bath & Bust scenario could spell short-term financial trouble for rival home furnishings retailers amid aggressive going-out-of-business sales across the country, one expert warned.
“In the short term, liquidation [would be] a little harsh on JC Penney, Kohl’s, Target, Walmart, Wayfair and maybe the Container Store — and to some extent maybe Macy’s — because someone like [liquidator] Gordon Brothers is going to launch a really aggressive liquidation sale,” retail expert Jan Rogers Kniffen told Yahoo Finance.
The potential for Bed Bath & Beyond’s ( BBBY ) bust in 2023 appears to be high.
Bed Bath & Beyond said Thursday that bankruptcy is on the table as it works to shore up its shaky balance sheet after a disastrous holiday shopping season.
“The Company continues to consider all strategic alternatives including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or postponing the Company’s business activities and strategic initiatives or selling assets, other strategic transactions and/or other measures, including obtaining relief under the Bankruptcy Law of the USA,” reads the Bed Bath & Beyond press release.
“These measures may not be successful,” the company added, noting there was “significant doubt” about its ability to continue as a going concern.
For the fiscal third quarter ended November 26, 2022, sales fell more than 30% to $1.259 billion from $1.878 billion in the same quarter last year. The company said the figures reflected “lower customer traffic and reduced inventory availability levels, among other factors.”
Bed Bath & Beyond expects to report a net loss of $385.8 million for the quarter.
Meanwhile, shares of the retailer fell nearly 30% in Thursday’s session and then another 22% on Friday, sending the stock to levels not seen since 1992.
Bankruptcy experts aren’t ruling out Bed Bath & Beyond filing this month.
“I think it’s inevitable that they will report,” Macco CEO Drew McManigle said on Yahoo Finance Live. “I wouldn’t be surprised to see them as early as this weekend. There’s no reason they shouldn’t. I imagine they’ve been working on financing their debtor in possession.”
When asked about the bankruptcy, Bed Bath & Beyond spokeswoman Julie Strider told Yahoo Finance: “Since the launch of Bed Bath & Beyond Inc.’s comprehensive turnaround plan at the beginning of the third quarter, which included financial actions to improve our balance sheet and cash flow, we have been working with strategic advisors to evaluate all avenues for regaining market share and increasing liquidity, our stated priorities. Such avenues may include restructuring or refinancing our debt, seeking additional debt or equity capital, curtailing or delaying the Company’s business activities, and strategic initiatives; or asset sales, other strategic transactions and/or other measures. No decisions have been made at this time.”
In any case, Kniffen ultimately believes that Bed Bath & Beyond’s competitors will quickly recover from any widespread selloff after the shutdown.
The reason for this, Kniffen explained, is that Bed Bath & Beyond has bordered on irrelevance in the minds of customers for years because of its merchandise execution issues.
“Six months later those same players will see some marginal gains in market share,” Kniffen added. “But this company has been losing market share for twenty years. I don’t see how there are really any winners worth calling. It just can’t move the needle for anybody. Some share will go online and to Amazon, of course.”
Click here for the latest stock ticker trends from the Yahoo Finance platform
Click here for the latest stock market news and in-depth analysis, including stock-changing events
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance at Twitter, Facebook, Instagram, Flipboard, LinkedInand YouTube