If Bed Bath & Beyond goes out of business, here’s what may happen to its rivals

A Bed Bath & Bust scenario might convey some short-term monetary ache to rival residence furnishings retailers amid aggressive going-out-of-business clearance gross sales nationwide, one knowledgeable warned.

“Within the short-term, the liquidation [would be] a little bit robust on J.C. Penney, Kohl’s, Goal, Walmart, Wayfair and perhaps Container Retailer — and to some extent perhaps Macy’s — as a result of any person like [liquidator] Gordon Brothers will probably be operating a extremely aggressive liquidation sale,” retail knowledgeable Jan Rogers Kniffen instructed Yahoo Finance.

The potential for Mattress Bathtub & Past (BBBY) to go bust in 2023 is wanting excessive.

An individual exits a Mattress Bathtub & Past retailer in Manhattan, New York Metropolis, U.S., June 29, 2022. REUTERS/Andrew Kelly

Mattress Bathtub & Past said Thursday that chapter is on the desk as it really works to shore up its leaky steadiness sheet after a disastrous vacation procuring season.

“The Firm continues to contemplate all strategic alternate options together with restructuring or refinancing its debt, looking for further debt or fairness capital, decreasing or delaying the Firm’s enterprise actions and strategic initiatives, or promoting property, different strategic transactions and/or different measures, together with acquiring aid below the U.S. Chapter Code,” Mattress Bathtub & Past mentioned in a press release.

“These measures might not be profitable,” the corporate added, noting that there’s “substantial doubt” about its means to proceed as a “going concern.”

For its fiscal third quarter ending November 26, 2022, gross sales dropped over 30%, to $1.259 billion from $1.878 billion in the identical quarter final yr. The corporate mentioned these numbers mirrored “decrease buyer site visitors and decreased ranges of stock availability, amongst different elements.”

Mattress Bathtub & Past expects to report a internet lack of $385.8 million for the quarter.

In the meantime, shares of the retailer crashed by practically 30% in Thursday’s session after which one other 22% on Friday, placing the inventory at ranges not seen since 1992.

Chapter execs do not rule out a submitting from Mattress Bathtub & Past occurring this month.

“I feel it is inevitable that they file,” Macco CEO Drew McManigle said on Yahoo Finance Live. “I would not be shocked to see them file as early as this weekend. There is no purpose to not. I think they have been engaged on their debtor in possession financing.”

When requested in regards to the chapter query, Mattress Bathtub & Past spokesperson Julie Strider instructed Yahoo Finance: “Since initiating Mattress Bathtub & Past Inc.’s complete turnaround plan at the beginning of the third quarter, which included monetary actions to enhance our steadiness sheet and money flows, now we have been working with strategic advisors to guage all paths to regain market share and improve liquidity, our acknowledged priorities. Such paths could embody restructuring or refinancing our debt, looking for further debt or fairness capital, decreasing or delaying the Firm’s enterprise actions and strategic initiatives, or promoting property, different strategic transactions and/or different measures. No determinations have been made as of this time.”

In any case, Kniffen in the end believes Mattress Bathtub & Past’s rivals will rapidly rally again from any widespread going-out-of-business gross sales.

The explanation for that, Kniffen defined, is as a result of Mattress Bathtub & Past has bordered on irrelevancy within the minds of customers for years attributable to merchandise execution points.

“Six months later those self same gamers will see some marginal market share positive aspects,” Kniffen added. “However this firm has been shedding market share for twenty years now. I do not see how there are actually any winners price calling out. It simply cannot transfer the needle for anybody. Some share will go surfing to Amazon, too, in fact.”

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