It's no secret that the coronavirus pandemic has dealt a harsh blow to retailers over the past six months. Temporary store closures and decreased foot traffic due to capacity regulations have made it more difficult to keep up with the costs associated with operating physical stores. And given the ease of online shopping, many retailers are shifting focus to their e-commerce sites, which are a lot less expensive to maintain.
It's not shocking, then, to learn that another popular retailer is making plans to shutter stores over the next few months. Earlier this year, home goods hub Bed Bath & Beyond (NASDAQ: BBBY) announced its intent to close 200 stores. And recently, it identified the first 63 locations that will shut down by the end of 2020. Specifically, the retailer intends to close stores in 29 states, with California and New York losing the most locations in the near term at six apiece.
Like many publicly traded retailers, Bed Bath & Beyond has seen its share price decline slowly but steadily over the past five years. In Sept of 2015, shares were trading around $60 apiece. As of this writing, they're at $12.37. By closing 21% of its namesake stores, Bed Bath & Beyond is hoping to conserve revenue, all the while shifting focus to digital sales, which have the potential to take off despite the ongoing recession.
Bed Bath & Beyond sells essential home goods, and it's not known as a luxury brand. As such, there will be perpetual demand for its product line, and it's really just a matter of delivering it in the most cost-effective manner possible.
Still, the news comes as a blow to real estate investors who have seen dozens of popular retail chains drop like flies. And if the trend continues, it could spell serious trouble.
Will the retail apocalypse happen sooner than expected?
For years, experts have warned of the retail apocalypse -- the demise of physical stores as online shopping takes over. And the closing of Bed Bath & Beyond locations should have investors very worried. Bed Bath & Beyond is a large retailer that commonly anchors strip malls, and replacing it as a tenant is no easy task given the size of its stores.
The silver lining, however, is that Bed Bath & Beyond won't be getting rid of all of its locations anytime soon. Earlier in the year, when strict lockdown measures were implemented in response to the COVID-19 outbreak, the retailer had success with offerings like curbside pickup and store-based online fulfillment. It's likely that Bed Bath & Beyond will continue to work on improving this side of the business as it also focuses its attention on improving its online platform.
Still, these days, any store closure announcement is a source of dread for retail investors. And the fact that Bed Bath & Beyond is moving forward quickly with concrete plans is a sign that the aforementioned apocalypse may rear its ugly head sooner than anyone would like it to.