By Senad Karaahmetovic
Bed Bath & Beyond (NASDAQ:BBBY) shares are down over 40% in premarket Monday after the retailer filed for bankruptcy protection.
The company said it is still interested in pursuing a sale instead of liquidation should a bidder for the business come forward.
“The Company has received a commitment of approximately $240 million in debtor-in-possession financing ("DIP") from Sixth Street Specialty Lending Inc (NYSE:TSLX). Following court approval, the Company expects this financing to provide the necessary liquidity to support operations during the Chapter 11 process,” BBBY said in a press release.
Wall Street analysts weighed in on the news with Evercore ISI analysts still hopeful that the company will find a buyer for its Buy Buy Baby concept. On the other hand, Piper Sandler analysts said the Chapter 11 filing is a positive for Target (NYSE:TGT) and Walmart (NYSE:WMT).
“We believe that we are entering a new phase of retail industry consolidation and that Target and Walmart will be long-term share beneficiaries,” Piper Sandler analysts wrote in a note.
Specifically, the analysts believe BBBY’s market share will largely go to Target, Walmart, and Amazon (NASDAQ:AMZN).
“Investments in store pickup, store experience, and e-comm are driving share gains at both TGT and WMT, and we expect these to accelerate as we enter a new phase of retail consolidation.”
Similarly, BofA analysts agree that these three companies will benefit from the likely BBBY bankruptcy. In addition, they see Wayfair (NYSE:W) and Overstock (NASDAQ:OSTK) seeing “a degree of revenue upside.”
“We estimate that for every 5% of Bed Bath & Beyond revenue (not including Buy Buy Baby), Wayfair revenue would increase 2% with high adjusted EBITDA flowthrough (we estimate low-to-mid tens of millions). For Overstock, we estimate that for every 1% of Bed Bath revenue (we adjust down given Overstock US revenues are less than 20% of Wayfair), Overstock revenues would increase 3% and adjusted EBITDA could increase by ~$10mn (or nearly 1ppt),” the analysts explained.
On the other hand, they don’t expect to see RH (NYSE:RH) nor Arhaus (NASDAQ:ARHS) benefiting from the Bed Bath & Beyond bankruptcy.