What’s bad for Bed, Bath & Beyond could be good news for other retailers. Bed Bath & Beyond warned last week that it was running out of cash and was considering filing for bankruptcy protection. The home-goods retailer is preparing to file for Chapter 11 within weeks, according to the Wall Street Journal. “It looks like the hopes of BBBY’s turnaround story are waning,” UBS analyst Michael Lasser said in a note Friday. Doubts about the company’s future and reports of bankruptcy filings “leave an opportunity for other retailers to take further stakes,” he said. Lasser said Walmart and Target stand to gain the most market share from Bed Bath & Beyond. According to UBS, the two have significant overlap with their product offerings and geography – 79% of Bed Bath & Beyond stores have at least one Walmart within a 10-minute drive, and 77% have at least one Target. Is. WMT 1Y Mountain Walmart’s One-Year Performance Walmart could see 35-40 basis points (0.35-0.40 percentage points) of incremental, comparable growth in its Native US business this year if all Bed, Bath & Beyond and Buy Bye Baby stores were closed Jate Lasser said Walmart was to potentially capture 25% of its addressable share. Bye Bye Baby is owned by Bed, Bath & Beyond. If the additional sales come in at a 25% contribution margin, that would be 2% to 3% earnings-per-share accretion. For Target, that same result would contribute 125 basis points to 150 basis points of incremental comparable growth, which would amount to 5% to 10% of EPS accretion, he added. TGT 1Y Mountain Target’s One-Year Performance The two major retailers aren’t the only potential beneficiaries. Dollar stores, warehouse clubs and department stores are also among rival chains that could take share, according to UBS. “With this 3Q’22 pre-release, BBBY noted that its net sales decreased -33% compared to the prior year, suggesting that this momentum for the stock is already happening,” Lasser said. Told. Sleep Number is among the retailers that could see an uptick in demand from consumers shopping for mattresses and bedding. According to UBS, approximately 59% of Bed, Bath & Beyond stores have a Sleep Number location within 10 minutes. Privately held mattress firms should also be encouraged. Home Goods, owned by TJX, competes with Bed, Bath & Beyond in home furnishings, kitchen products and other accessories. It has stores within a short distance of about 60% of Bed, Bath & Beyond stores. Costco and Walmart’s Sam’s Club would also benefit. Costco recently reported a 7% year-over-year increase in net sales for December and was named to Evercore ISI’s “Fab Five” list. Some 40% of Bed, Bath & Beyond stores have a Costco within a 10-minute drive, while 43% have a Sam’s Club. — CNBC’s Michael Bloom contributed reporting.
UBS sees these retail stocks winning from a potential Bed Bath & Beyond bankruptcy