Bed Bath & Beyond Inc. BBBY is slated to release fourth-quarter fiscal 2019 results on Apr 15, 2020. In the last reported quarter, the leading specialty retailer delivered an adjusted loss of 38 cents per share, missing the Zacks Consensus Estimate of earnings of 3 cents. Moreover, its bottom line substantially missed estimates by 319.5%, on average, over the trailing four quarters.
The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings is pegged at 21 cents, suggesting a decline of 82.5% from the year-ago reported figure. Estimates have been unchanged in the past 30 days. The consensus estimate for fiscal fourth-quarter sales is pegged at $3,092 million, indicating a 6.5% decline from the prior-year quarter’s reported number.
Bed Bath & Beyond Inc. Price and EPS Surprise
Bed Bath & Beyond Inc. price-eps-surprise | Bed Bath & Beyond Inc. Quote
Key Points to Note
Bed Bath & Beyond has been battling soft top-line numbers, comparable sales (comps) and margins for the past several quarters. The company’s preliminary update on fourth-quarter fiscal 2019, released on Feb 11, indicates continued softness in the top line. Management stated that it has been facing short-term hurdles in its efforts to stabilize the business. Notably, the company has been witnessing soft store traffic trends along with challenges in execution.
Bed Bath & Beyond reported comparable sales decline of 5.4% for the first two months (December and January) of the fiscal fourth quarter. This reflected a low-double-digit percentage decline 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 activities and markdowns.
Comparable sales decreased around 11% (on a directional basis) from stores. Meanwhile, comparable sales improved 20% for the digital business. Gross margin for the aforesaid period decreased 300 basis points (bps), owing to lower merchandise margin due to increased promotions, as well as increased proportion of digital sales within its total sales mix.
Selling, general & administrative expenses (SG&A), as a percentage of net sales, grew 390 bps. Adjusted SG&A, as a percentage of net sales, rose 190 bps. The rise was due to increased fixed costs like occupancy and technology-related expenses on lower sales. Moreover, higher advertising and consulting expenses contributed to the increase.
Based on the preliminary results, we believe that the company’s fourth-quarter fiscal 2019 results will reflect soft sales, lower gross margin and higher SG&A expenses.
Our proven model does not predict an earnings beat for Bed Bath & Beyond this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Although Bed Bath & Beyond carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.
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