Bed Bath & Beyond Inc (NASDAQ: BBBY), on Friday, confirmed that it doesn’t have sufficient funds to repay its debt. Shares are still slightly in the green this morning.
JPMorgan has already presented the embattled chain of domestic merchandise retail stores with a notice of default. Consequently, Bed Bath & Beyond said in a regulatory filing today:
This will lead the Company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code.
Earlier this month, BBBY said it lost $385.8 million in its third financial quarter – more than double the $158 million that analysts had expected (read more).
Also on Friday, an Oppenheimer analyst said the retailer’s demise would be a benefit for Target Corporation (NYSE: TGT). His $190 price objective on the department store suggests about a 13% upside from here.
Once Bed Bath & Beyond fully liquidates, Parikh says in his research note, Target will see a meaningful increase of 14 cents to 28 cents in its per-share earnings.
We think Target Corporation could have even better access to more brands over time to the extent a significant Bed Bath & Beyond retrenchment comes to fruition.
His conservative call is for a 50 bps to 100 bps boost to its comps in the near term. Parikh is bullish also because Target is committed to expanding its digital footprint and has a bunch of partnerships with other brands.
Target stock that pays a dividend yield of 2.55% is currently down over 30% versus its high in April 2022. In its current financial quarter, the retailer is expected to earn $1.4 a share – down significantly from $3.19 per share a year ago.
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