A bed bath and bust scenario could spell short-term financial pain for rival home furnishings retailers as aggressive sell-offs across the country go out of business, an expert has warned.
“In the short term, the liquidation [would be] a bit hard on JC Penney, Kohl’s, Target, Walmart, Wayfair and maybe Container Store – and to some extent maybe Macy’s – because someone likes [liquidator] Gordon Brothers is going to do a really aggressive liquidation sale,” retail expert Jan Rogers Kniffen told Yahoo Finance.
The potential for Bed Bath & Beyond (BBBY) to go bust in 2023 looks high.
A person exits a Bed Bath & Beyond store in Manhattan, New York City, U.S., June 29, 2022. Portal/Andrew Kelly
Bed Bath & Beyond said Thursday bankruptcy is on the table as the company works to shore up its leaky 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, reducing or delaying the Company’s operations and strategic initiatives, or selling assets, other strategic transactions and/or others Measures, including obtaining relief under the U.S. bankruptcy law,” Bed Bath & Beyond said in a statement.
“These actions may not be successful,” the company added, noting that there were “significant doubts” about its ability to proceed as a going concern.
For the fiscal third quarter ended November 26, 2022, revenue declined more than 30% to $1.259 billion from $1.878 billion in the same quarter last year. The company said these numbers reflect “lower customer traffic and reduced stock availability, among other things.”
Bed Bath & Beyond expects a net loss of $385.8 million for the quarter.
Meanwhile, shares of the retailer plunged nearly 30% on Thursday and another 22% on Friday, taking the stock to levels not seen since 1992.
Bankruptcy professionals aren’t ruling out a Bed Bath & Beyond filing this month.
The story goes on
“I think it’s inevitable that they’ll file a motion,” Macco CEO Drew McManigle said on Yahoo Finance Live. “I wouldn’t be surprised if they filed their case as early as this weekend. There is no reason not to do this. I suspect they have been working on their self-administered funding.”
When asked about the bankruptcy issue, Bed Bath & Beyond spokeswoman Julie Strider told Yahoo Finance, “Since initiating Bed Bath & Beyond Inc.’s comprehensive turnaround plan earlier in the third quarter, financial measures have been taken to improve our balance sheet and cash flows, we worked with strategic advisors to evaluate all avenues to regain market share and improve liquidity, our stated priorities. Such avenues may include restructuring or refinancing our debt, seeking additional debt or equity, reducing or delaying the Company’s operations and strategic initiatives or asset sales, other strategic transactions and/or other actions. No decisions have been made at this point.”
In any case, Kniffen ultimately believes that Bed Bath & Beyond’s competitors will bounce back quickly from a widespread sale out of business.
The reason, Kniffen explained, is that Bed Bath & Beyond has bordered on insignificance in the minds of shoppers for years due to product execution issues.
“Six months later, the same players will see modest market share gains,” Kniffen added. “But this company has been losing market share for twenty years. I don’t see how there can really be winners worth mentioning. It just can’t move anyone’s needle. Some shares will also go to Amazon, of course.”
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