Please ensure Javascript is enabled for purposes of website accessibility

Why Bed Bath & Beyond, Gap, and Other Retail Stocks Are Falling Today

By John Rosevear – May 13, 2020 at 3:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Pessimism from the Fed triggered a broad sell-off.

What happened

Shares of several retail-chain operators were falling along with the broader market on Wednesday, after Federal Reserve Chairman Jerome Powell signaled his growing concern about the current downturn in the U.S. economy.

Here's where things stood for these three companies' stocks as of 3 p.m. EDT, relative to their closing prices on Tuesday.

  • Bed Bath & Beyond (BBBY 9.67%) was down 7.8%.
  • Designer Brands (DBI 5.44%) was down 6.8%.
  • The Gap (GPS 7.21%) was down 5.8%.

So what

The broader market's slide was triggered by a speech by Powell on Wednesday morning, when he said that the path ahead for the U.S. economy is "highly uncertain and subject to significant downside risks."

That's not encouraging for these three retailers, which all are eager to get their physical stores reopened and revenue flowing. All three have been scrambling to preserve cash since closing most of their brick-and-mortar stores in March amid the outbreak of the COVID-19 virus.

A Bed Bath & Beyond storefront.

Bed Bath & Beyond has delayed its plan to reopen stores until at least May 30. Image source: Bed Bath & Beyond.

Given that there was no significant news on any of the three on Wednesday, the broader market sell-off probably explains why the stocks were down. That said, here are the most recent developments from each company that might be of interest to retail investors.

  • Bed Bath & Beyond said on Monday that it will wait to reopen most of its stores until May 30, while expanding no-contact curbside pickup to more locations and boosting its online-fulfillment capabilities in the interim. It will continue to pay 100% of the cost of health insurance for its furloughed store employees while stores are closed. The company had said previously that it would begin reopening stores on May 16.
  • Designer Brands, owner of DSW Designer Shoe Warehouse and other big-box shoe chains, said on May 4 that it began reopening its stores on April 30 and expected to open another 200 by the end of last week. The company suspended dividends and share repurchases on May 1, after amending the terms of its $400 million revolving line of credit. 
  • Gap on May 7 announced a series of moves to bolster its balance sheet. It said that it had completed its offering of $2.25 billion in senior secured notes, established a new $1.868 billion revolving-credit facility, and paid off $500 million outstanding on its prior credit facility. A day earlier (May 6), Gap said that it plans to reopen 800 of its stores by the end of May. 

Now what

Investors in Bed Bath & Beyond heard from that company's senior leaders when it reported its fiscal fourth-quarter earnings on April 15. Designer Brands and Gap haven't yet announced dates for their next quarterly earnings reports, but both have typically reported in late May in past years. 

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

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Gap, Inc. Stock Quote
The Gap, Inc.
$9.07 (7.21%) $0.61
Bed Bath & Beyond Inc. Stock Quote
Bed Bath & Beyond Inc.
$6.57 (9.67%) $0.58
Designer Brands Inc. Stock Quote
Designer Brands Inc.
$16.08 (5.44%) $0.83

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.