Bed Bath & Beyond Inc. (BBBY - Free Report) is the latest retailer to join the fight against COVID-19 by shutting down more than 50% of its stores in the United States and Canada, beginning today till Apr 3. However, stores selling healthcare, personal care, infant care, cleaning supplies or food and beverages will remain open, according to the state and local regulations.
Per media reports, this move came after its employees raised objection to keeping stores open. In this context, sources claim that store closures will not affect employees as they will continue to receive salaries for the aforementioned period.
Speaking of store closures, other major retailers, including Macy’s (M - Free Report) , Nordstorm (JWN - Free Report) and Kohl’s Corp. (KSS - Free Report) , have also responded to this crisis by closing all stores. In this regard, Macy’s closed all stores nationwide, from Mar 17 till 31. Further, Nordstorm shuttered all stores across the United States and Canada for the same timeframe. Also, Kohl’s shut down all stores worldwide, starting Mar 19 to Apr 1. That said, all these companies have noted that online stores will continue to operate.
Coming back to Bed Bath & Beyond, it will close roughly 800 store locations, which don’t sell health and personal care products. Meanwhile, 700 stores with essential items, such as buybuy BABY, Harmon and other concepts, will continue to operate in order to meet customers’ daily needs.
This is seen as yet another blow to the company as it has been witnessing a dismal sales trend reflecting a drab holiday season. This dismal sales trend can be attributable to soft comparable sales (comps) due to a decline in the number of store transactions. Comparable sales decline in the first two months of fourth-quarter fiscal 2019 reflected a low double-digit percentage decrease in store transactions, partly countered by a mid-single-digit percentage rise in the average transaction amount.
Due to such downsides, shares of this Zacks Rank #4 (Sell) company have plummeted 67.5% in the past three months compared with the industry’s decline of 45.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moving on, management’s store closure announcement follows U.S. President Trump’s declaration of a health emergency on Mar 13, in the wake of the rapid spread of this deadly virus. Later, the Federal Reserve announced an interest rate cut to 0-0.25% in order to support the economy that has been badly hit by this outbreak. This will boost margins and lower inflation. Also, it revealed plans to buy $500 billion of Treasury securities and $200 billion of agency-backed mortgage securities to lower the impact of COVID-19 on the economy.
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