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

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A Bed Bath & Bust scenario could bring some short-term financial pain to rival home furnishings retailers amid aggressive going-out-of-business clearance sales nationwide, one expert warned.

“In the short-term, the liquidation [would be] a little tough on J.C. Penney, Kohl’s, Target, Walmart, Wayfair and maybe Container Store — and to some extent maybe Macy’s — because somebody like [liquidator] Gordon Brothers will be running 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 is looking high.

A person exits a Bed Bath & Beyond store in Manhattan, New York City, U.S., June 29, 2022. REUTERS/Andrew Kelly

Bed Bath & Beyond said Thursday that bankruptcy is on the table as it 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 capital, reducing or delaying the Company’s business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code,” Bed Bath & Beyond said in a statement.

“These measures may not be successful,” the company added, noting that there is “substantial doubt” about its ability to continue as a “going concern.”

For its fiscal third quarter ending November 26, 2022, sales dropped over 30%, to $1.259 billion from $1.878 billion in the same quarter last year. The company said those numbers reflected “lower customer traffic and reduced levels of inventory availability, among other factors.”

Bed Bath & Beyond expects to report a net loss of $385.8 million for the quarter.

Meanwhile, shares of the retailer crashed by nearly 30% in Thursday’s session and then another 22% on Friday, putting the stock at levels not seen since 1992.

Bankruptcy pros don’t rule out a filing from Bed Bath & Beyond happening this month.

“I think it’s inevitable that they file,” Macco CEO Drew McManigle said on Yahoo Finance Live. “I wouldn’t be surprised to see them file as early as this weekend. There’s no reason not to. I suspect they’ve been working on their debtor in possession financing.”

When asked about the bankruptcy question, Bed Bath & Beyond spokesperson Julie Strider told Yahoo Finance: “Since initiating Bed Bath & Beyond Inc.’s comprehensive turnaround plan at the start of the third quarter, which included financial actions to improve our balance sheet and cash flows, we have been working with strategic advisors to evaluate all paths to regain market share and enhance liquidity, our stated priorities. Such paths may include restructuring or refinancing our debt, seeking additional debt or equity capital, reducing or delaying the Company’s business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures. No determinations have been made as of this time.”

In any case, Kniffen ultimately believes Bed Bath & Beyond’s rivals will quickly rally back from any widespread going-out-of-business sales.

The reason for that, Kniffen explained, is because Bed Bath & Beyond has bordered on irrelevancy in the minds of shoppers for years due to merchandise execution issues.

“Six months later those same players will see some marginal market share gains,” Kniffen added. “But this company has been shedding market share for twenty years now. I don’t see how there are really any winners worth calling out. It just can’t move the needle for anyone. Some share will go online to Amazon, too, of course.”

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