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Bed Bath & Beyond to Close More Stores Amid Coronavirus Scare

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After shutting more than 50% of its stores last week, Bed Bath & Beyond Inc. BBBY said it will close all retail stores in the United States and Canada (barring a few) to contain the spread of COVID-19. The home furnishing retailer will shut down all retail outlets, apart from buybuy BABY and Harmon Face Values ('Harmon') stores, from today until Apr 3, 2020. With this, the company will have just about 175 stores operating out of 1500.

Management will continue to make payments alongside offering benefits to workers employed for the abovementioned period. Further, the company will make certain essential products available in its stand-alone buybuy BABY and Harmon stores, including infant, personal and health care products. Also, the company is making efforts to improve delivery services to offer other important products to its loyal customers. To this end, it is improving its e-commerce operations and regional distribution channel.

Certainly, Bed Bath & Beyond is taking all possible measures amid the growing spread of coronavirus. Prior to this, the company closed roughly 800 store locations, which don’t sell health and personal care products, on Mar 20. Meanwhile, 700 stores with essential items, such as buybuy BABY, Harmon and other concepts, continued to operate to meet customers’ daily needs.

The coronavirus, which originated in China, has spread enormously to the extent that cases and deaths outside the nation have exceeded the number in China, per a World Health Organization (WHO) report. Sadly, the global pandemic has infected more than 290,000 people worldwide and the death toll has crossed 12,000. While the deadly virus has jeopardized the global economy, the retail sector (in particular) remains under pressure due to supply-chain bottlenecks, reduced traffic, an increasing number of store closures and limited hours of working.

Apart from Bed Bath & Beyond, many other retailers, including Kohl’s KSS, Ulta Beauty ULTA and Burlington Stores (BURL - Free Report) , have announced temporary store closures due to the deadly virus spread.

Coming back to Bed Bath & Beyond, we expect these store closures to be another blow to the company, which has already been seeing soft comparable sales (comps) for a while due to a decline in the number of store transactions. This trend was again reflected in the company’s recent update for the first two months of the fourth quarter, wherein comps remained soft. Comparable sales decline in the first two months reflected a low-double-digit percentage decrease in transactions in stores, partly countered by a mid-single-digit percentage rise in the average transaction amount. The decline can be attributed to soft store traffic, issues related to inventory management, and higher promotional activity and markdowns.

Shares of this Zacks Rank #4 (Sell) company have crashed 71.1% in the past three months compared with the industry’s decline of 43.3%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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