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.
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.
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