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If Bed Bath & Beyond goes bankrupt, here's what could happen to its rivals

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A Bed Bath & Bust scenario could spell short-term financial hardship for rival home furnishings retailers amid aggressive nationwide liquidation sales, an expert has warned.

“In the short term, the liquidation [would be] a little hard on JC Penney, Kohl’s, Target, Walmart, Wayfair and maybe Container Store – and to some extent maybe Macy’s – because someone like [liquidator] Gordon Brothers will hold a very aggressive liquidation sale,” retail expert Jan Rogers Kniffen told Yahoo Finance.

The potential for Bed Bath & Beyond (BBBY) to go bankrupt in 2023 looks high.

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

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

Bed Bath & Beyond said Thursday that bankruptcy is on the table as it scrambles 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 business activities and strategic initiatives of the Company, or the sale of assets, other strategic transactions and/or other actions, 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 business.”

For its fiscal third quarter ending 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 numbers reflect “decline in 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, the retailer’s shares tumbled nearly 30% in Thursday’s session and then another 22% on Friday, putting the stock at levels not seen since 1992.

Bankruptcy pros aren’t ruling out a Bed Bath & Beyond filing happening this month.

“I think it’s inevitable that they’ll 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 financing their debtor-in-possession.”

Asked about the bankruptcy issue, Bed Bath & Beyond spokeswoman Julie Strider told Yahoo Finance: “Since the launch of 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 flow, we worked with strategic advisors to assess all avenues to regain market share and improve liquidity, our stated priorities. These avenues may include the restructuring or refinancing of our indebtedness, seeking additional debt or equity, curtailing or delaying Company business activities and strategic initiatives, or selling assets, other strategic transactions and/or other actions. No decision has been made yet.”

Either way, Kniffen ultimately believes Bed Bath & Beyond’s rivals will quickly rally to any widespread sell-out.

The reason for this, Kniffen explained, is that Bed Bath & Beyond has brushed with irrelevance in the minds of shoppers for years due to merchandise fulfillment issues.

“Six months later, these same players will see marginal market share gains,” Kniffen added. “But this company has been losing market share for twenty years now. I don’t see how there are really any winners worth calling out. That just can’t move the needle for anyone. Of course .”

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