Bed Bath & Beyond Lowers Guidance

After yesterday’s close, Bed Bath & Beyond (BBBY) issued a press release that said that fiscal Q3, which ended in November, will come in below their previous guidance. The official earnings report doesn’t come out until January 7, but they wanted to give us a heads-up.

Bed Bath & Beyond now expects Q3 revenues to rise to $3.0 billion. That’s an increase of just 0.3%. They had previously expected sales to rise between 1.8% and 4.0%. They also expect same-store sales to fall by 0.4%. The previous guidance was for an increase between 1% and 3%.

Now for earnings. BBBY sees Q3 earnings ranging between $1.07 and $1.10 per share. The previous range was $1.14 to $1.21 per share. Note that a miss on the top line is inevitably a larger percentage miss on the bottom line.

“Our performance in the third quarter reflects the recent trends we have been experiencing,” stated Steven H. Temares, Chief Executive Officer and Member of the Board of Directors of Bed Bath & Beyond Inc. “On the one hand we experienced softer in-store transaction counts, and on the other hand sales from our customer-facing digital channels demonstrated strong growth, in excess of 25%. These mixed results were also impacted by the overall softness reported in the macro-retail environment during the quarter. As the retail environment continues to evolve, we remain focused on positioning our Company for long-term success.”

This isn’t good news. The stock has been down as much as 6.5% today, and it touched a new 52-week low below $48 per share. However, I’m more concerned on a slow-down during their crucial fiscal Q4 (December, January, February). This news suggests that Q4 won’t be good but we can’t confirm how much.

Q4 accounts for close to 35% of their annual profit. Bed Bath & Beyond gave us a small hint when they said they expect same-store sales to rise by 1% from the beginning of December through Christmas.

I decided to keep Bed Bath & Beyond on next year’s Buy List, and this news doesn’t alter that.

Posted by on December 23rd, 2015 at 12:22 pm


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