What's anything but a fun time for storied toy brand Toys 'R' Us is likely triggering excitement at some of the nation's strongest big box retailers.
Walmart (WMT) , Target (TGT) and Bed Bath & Beyond (BBBY) alone stand to haul in as much as $4.1 billion in sales and more than $1 in earnings per share annually thanks to Toys 'R' Us no longer being in business, estimates Jefferies analyst Dan Binder. Target is poised to really clean up off Toys 'R' Us' bankruptcy judging by Binder's calculations (see below). Bed Bath & Beyond's buybuy Baby concept will win as Toys 'R' Us' Babies 'R' Us concept shutters.
- Estimated annualized sales lift: $1.48 billion
- Estimated annualized same-store sales boost: 2%
- Estimated annualized earnings per share increase: 55 cents a share
- Estimated annualized sales lift: $2.4 billion
- Estimated annualized same-store sales boost: 0.7%
- Estimated annualized earnings per share increase: 17 cents a share
Bed Bath & Beyond
- Estimated annualized sales lift: $171 million to $257 million
- Estimated annualized same-store sales boost: 1.4% to 2.1%
- Estimated annualized earnings per share increase: 22 cents a share to 33 cents a share
The Bottom Line
Before investors go out and buy all three of these stocks on the hopes of explosive 2018 earnings surprises thanks to a dead competitor, they may want to consider the elephant in the room in Amazon (AMZN) . The tech giant, and Action Alerts Plus holding, will also score its fair share of sales from Toys 'R' Us' one-time $6.9 billion in annual sales.
Morningstar's R.J. Hottovy expects Amazon could rake in some $2 billion to $3 billion extra in sales this year from Toys 'R' Us' downfall. The total could easily be at the high end, and come at the expense of big box retailers, if Amazon uses the opportunity to aggressively price toys to capture the market share that's up for grabs.
Let the battle for toy sales begin.
History of Toys 'R' Us
For you folks feeling a sense of nostalgia off the Toys 'R' Us bankruptcy news, watch below.