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Why Bed Bath & Beyond, Macy’s, and Other Retail Stocks Are Falling Today

By John Rosevear – May 1, 2020 at 2:46PM

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Fears are growing as more retailers consider bankruptcy.

What happened

Shares of several brick-and-mortar retail chains were trading lower on Friday, as investors grappled with mixed signals around reopening stores and a new report that apparel company J.Crew is on the verge of bankruptcy. 

Here's where things stood as of 2:15 p.m. EDT for these companies' stocks, relative to their closing prices on Thursday.

  • Bed Bath & Beyond (BBBY -5.92%) was down about 9%.
  • Gap (GPS -4.40%) was down about 5.7%.
  • Kohl's (KSS -2.34%) was down about 5%.
  • Macy's (M -0.44%) was down about 7.6%.

So what

The Wall Street Journal reported on Thursday evening that preppy apparel retailer J.Crew Group is preparing to file for bankruptcy protection. J.Crew has $1.7 billion in debt, a legacy of past leveraged buyouts, that it had planned to pay down with proceeds from a now-scrapped initial public offering of its Madewell subsidiary. 

Like many U.S. retailers, including all four of the companies here, J.Crew closed its stores in mid-March as the COVID-19 outbreak spread in the United States. The company joins a growing list of traditional retailers, including Neiman Marcus Group and J.C. Penney (JCPN.Q), that are reportedly making preparations to file for bankruptcy protection.

A Bed Bath & Beyond store.

Bed Bath & Beyond is trying to use its online business to offset store closings, with some success. Image source: Bed Bath & Beyond.

So far, Bed Bath & Beyond, Gap, Kohl's, and Macy's have avoided landing on that list. All have scrambled to borrow, conserve, and -- in a couple of cases -- raise enough cash to survive the pandemic-driven store closings and whatever economic aftermath follows. 

Earlier this week, Macy's confirmed that it will resume operations at 68 of its U.S. locations on Monday, in states that are loosening restrictions on non-essential businesses that had been imposed to slow the spread of the coronavirus. The company aims to have all of its roughly 750 U.S. locations, including its Bloomingdale's stores, open by mid-June.

Separately, Kohl's revealed in a regulatory filing that it raised $600 million in a bond sale on Wednesday, bolstering its balance sheet as the uncertainty continues. 

Now what

Bed Bath & Beyond provided investors in consumer-discretionary stocks with a comprehensive update when it reported earnings on April 16. Investors in Gap, Kohl's, and Macy's can look forward to similar updates soon: All three are expected to report earnings in 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

Kohl's Corporation Stock Quote
Kohl's Corporation
KSS
$26.30 (-2.34%) $0.63
The Gap, Inc. Stock Quote
The Gap, Inc.
GPS
$8.47 (-4.40%) $0.39
Macy's, Inc. Stock Quote
Macy's, Inc.
M
$15.72 (-0.44%) $0.07
Bed Bath & Beyond Inc. Stock Quote
Bed Bath & Beyond Inc.
BBBY
$6.67 (-5.92%) $0.42
J. C. Penney Company, Inc. Stock Quote
J. C. Penney Company, Inc.
JCPN.Q

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

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