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Why Some Brick-and-Mortar Retail Stocks Are Down Today

By John Rosevear – Updated Apr 20, 2020 at 4:51PM

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Bed Bath & Beyond, Gap, Macy's, and Urban Outfitters are all trading lower.

What happened

Shares of several brick-and-mortar retailers were moving lower on Monday, as slumping oil prices and pessimism about the timing of store reopenings drove a broad-based sell-off.

Here's where things stood for these four companies' stocks at the close of trading today relative to their closing prices on Friday.

  • Bed Bath & Beyond (BBBY 7.09%) was down 5%.
  • Gap (GPS 8.45%) was down 6.1%.
  • Macy's (M 7.30%) was down 10.3%.
  • Urban Outfitters (URBN 6.14%) was down 6.2%.

So what

It's hard to discern a single catalyst behind the selling pressure that hit these four stocks on Monday, aside from general pessimism about the likely state of the post-COVID-19 world. Given that all four companies have closed their brick-and-mortar stores in North America (and in some cases, elsewhere), any sense that social-distancing rules will be extended is plainly bearish. 

A Macy's sign on the outside of a store.

Macy's is reportedly considering pledging some of its real estate to back a bond issue. Image source: Macy's.

With that said, here's a quick look at the latest developments for each company.

  • In its earnings report after the markets closed last Wednesday, Bed Bath & Beyond said that its earnings beat Wall Street's estimates, and that it had $1.4 billion in cash on hand as of the end of its fiscal quarter, March 2. That seemed like good news, but after a bit of time to digest the report, at least some analysts are saying that the company will need a lot more cash to address its longer-term problems. 
  • Gap hasn't issued an update since March 30, when new CEO Sonia Syngal said that the company had furloughed its store teams in the U.S. and Canada indefinitely without pay (but with benefits). Gap has reportedly canceled orders of summer and fall merchandise for its brick-and-mortar stores, asking vendors to deliver only what's needed for its online storefront's fulfillment centers. 
  • Macy's is exploring ways to use its real estate holdings to raise enough cash to ride out the pandemic, Bloomberg reported after the markets closed on Friday. One possibility: Macy's could issue bonds backed by some of its real estate and other assets, such as inventory. Macy's had no comment, except to say that it's exploring a range of options. 
  • In a note on Monday morning, Loop Capital analyst Laura Champine cut her price target for Urban Outfitters to $18 from $23, while maintaining a hold rating on the stock. Champine said that the Wall Street consensus forecast calling for Urban Outfitters to earn $1.35 per share in the current quarter is looking "stale," given that the company's stores remain closed with no visibility into a reopening date.

Now what

While Bed Bath & Beyond reported its quarterly earnings last week, retail-focused investors in the other three companies are still looking forward to detailed updates from their management teams. Those will happen next month: Urban Outfitters has said that it will report its fiscal 2021 first-quarter results on May 19; Macy's and Gap haven't announced dates, but both typically report during the last two weeks of May. 

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Gap, Inc. Stock Quote
The Gap, Inc.
GPS
$9.18 (8.45%) $0.71
Macy's, Inc. Stock Quote
Macy's, Inc.
M
$17.27 (7.30%) $1.18
Urban Outfitters, Inc. Stock Quote
Urban Outfitters, Inc.
URBN
$21.43 (6.14%) $1.24
Bed Bath & Beyond Inc. Stock Quote
Bed Bath & Beyond Inc.
BBBY
$6.42 (7.09%) $0.42

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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