Bed Bath and Beyond (BBBY) Stock Off on Sales Miss

Shares of Bed Bath and Beyond Inc. (BBBY) were trading down -3.45 or -4.34 percent to $76.00 per share in Friday's premarket, after the company released its third quarter earnings late yesterday. Bed Bath and Beyond stock closed at $79.45 per share, up +1.24 or +1.59 percent in Thursday's regular trading session.

Union, New Jersey based Bed Bath and Beyond was founded in 1971 and is a United States chain of home furnishings retail stores specializing in products for the bedroom and bathroom.
The company also sells products for dining rooms and kitchens. BBBY sells its products through 1,510 retail locations in all 50 United States, Puerto Rico and Canada, with four stores in Mexico through a joint venture. Bed Bath and Beyond operates stores under the names, buybuy BABY; Cost Plus World Market or Cost Plus; Christmas Tree Shops, Christmas Tree Shops andThat!; Harmon or Harmon Face Values, and World Market. The company employs almost 50,000 people and its stock is in the S&P 500 and Nasdaq 100.

For the third fiscal quarter, which ended on November 29th, BBBY earned $225.4 million or $1.23 per diluted share, compared to $237.2 million or $1.12 per share in 2013's third quarter and beating analyst estimates of $1.19. Nevertheless, sales in the quarter fell short of expectations at $2.943 billion versus $2.865 billion in the same quarter last year. Analysts expected sales of $2.97 billion.

For the nine fiscal months ending on November 29th, Bed Bath and Beyond reported earnings of $636.4 million or $3.31 per diluted share versus $689.0 million or $3.20 in last year's third quarter, net sales for the nine months in 2014 were about $8.545 billion up +2.9% from sales of 8.301 billion in the same period one year ago.

Same store sales for the quarter increased by +1.7% versus an increase of +1.3% in the second quarter but year to date same store sales were up only +1.9% compared to a +2.7% increase in the same period last year.

In a conference call late yesterday, Chief Executive Officer Steven Tamares said that, "We recognize that the capital investments we are making and incremental expenses related to them are increasing our technology course and depreciation as well as other expenses as a percentage of net sales in a short-term. However, we are confident we are making the appropriate investments to position our company for long-term profitable growth and to further enhance shareholder value in an evolving retail environment.

The company's outlook for the fourth quarter of 2014 is for earnings of $1.78 to $1.83 with net earnings of $5.05 to $5.09 for the full fiscal year. However, the company's share repurchases could impact the quarterly and full year diluted weighted average of shares outstanding. Analysts were expecting $1.80 for the fourth quarter with the full year outlook in line with Wall Street expectations.

Bed Bath and Beyond stock made a new high of $79.64 yesterday and is reacting negatively to the sales miss. Nevertheless, the company has a PE of 16.5 and is an important index component, which may support the stock given the strength in the market yesterday.

Other News About Bed Bath and Beyond
Bed Bath & Beyond Seen Gaining In Online Sales
Company's stock receives an upgrade from analyst ahead of earnings.
Bed Bath: Moving Beyond Bricks & Mortar
Barron's article on the company's move to the internet.

Other Stocks in the News
Why the Google Downgrade is a Year too Late
Commentary on the Stifel downgrade released yesterday.
General Mills plans to close two plants
Company will lay off another 500 workers.

Published on Jan 9, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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