Existential troubles facing Bed Bath & Beyond (BBBY) are creating an opportunity for Club holding TJX Companies (TJX) to take market share, which could lead to sustainable long-term growth at the off-price retailer behind the T.J. Maxx, Marshalls and HomeGoods. Bed Bath & Beyond has closed hundreds of stores around the nation and floated a number of ideas to try to raise capital in hopes of mounting a turnaround and avoiding bankruptcy. However, a Chapter 11 filing appears unavoidable and could come at any time. Shares of Bed Bath & Beyond traded for less than 30 cents each Thursday. Remarkably, with the struggles at the company well-known at the time, shares traded near $54 per share in January 2021 during a burst of meme-stock trader interest. Known for its wide-ranging home goods items, Bed Bath & Beyond has struggled to attract consumers who have shifted their spending online and are geared toward promotional purchases as they turn more cautious in a challenging macroeconomic environment. The retailer has also been wrestling with inventory issues, accompanied by declining sales, which has ultimately led to poor financial performance. “TJX of the off-pricers has the greatest exposure to home and this could only increase their relevance in the home category,” retail analyst Dana Telsey said Thursday in an interview. “The assortment of goods, the categories they can extend into, and the strength of the balance sheet … allows for them to be a solid beneficiary” of Bed Bath & Beyond’s misfortunes. Off-price retailers have been “taking share of home at a pretty steady clip,” William Blair retail analyst Dylan Carden told CNBC on Thursday. As Bed Bath & Beyond continues to decline, there’s “a considerable amount of share that could be spread between Amazon , Target , Walmart and TJX to the tune of 50 or so basis points for each,” Carden added. William Blair has an outperform, or buy-equivalent, rating on TJX whose shares gained nearly 18.5% over the past 12 months. TJX 1Y mountain TJX Companies (TJX) 1-year performance That inventory glut isn’t just a Bed Bath & Beyond problem; it’s industry-wide. Specialty retailers and major department stores alike have scrambled to unload excess inventory that’s piled up from the pandemic. Over the past year, TJX has been there — ready and able to buy the excess apparel and home items at even steeper discounts, further exemplifying why its business model works well, even in tough times. More Bed Bath & Beyond store closures “can only enhance conversion,” said Telsey, whose firm Telsey Advisory Group likes TJX stock. “These locations are “in very good areas, there’s great traffic, good demographics — and given the lack of new shopping center development, this provides a new opportunity for expansion,” Telsey said. While Bed Bath & Beyond stores tend to be larger than TJX-owned locations, their closues “still open up more real estate, in key areas, which is important as these companies try to continue to…
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