Bed Bath & Beyond (BBBY) is a prominent specialty retailer in the United States and Canada.
The company released disappointing third-quarter earnings on January 6, with the company’s top and bottom lines continuing to deteriorate. Not only did the results fall short of experts’ predictions, but they also decreased on a year-over-year basis.
Revenues fell by 28% year-over-year, while adjusted loss per share grew to $0.25 per share from an adjusted profit of $0.08 per share in the year-ago quarter.
In terms of share price performance, BBBY has lost around 33% in the last year and 54% in the last six months.
Continued Disappointment in BBBY Q3 Results
The quarterly results were highlighted by persistent supply chain difficulties, increased expenses, and growing inflation. A decline in retail traffic as a result of the escalating COVID-19 Delta cases was also a painful spot in the quarter.
The poor results reflect the company’s inability to address inventory shortages and other supply-chain issues, as well as a significant drop in revenues during the quarter, which included the holiday season.
“The customer experience was compromised as strong demand wasn’t met with strong product availability,” BBBY CEO Mark Tritton stated during the company’s Q3 results call. Supply-chain concerns, he claimed, were hurting the company’s sales.
Furthermore, management’s forward guidance indicated weak business ahead. The business lowered its full-year adjusted profits projection to a loss of 15 cents to breakeven, down from 7-10 cents previously projected. Net sales for fiscal 2021 are now expected to be $7.9 billion, down from $8.1-$8.3 billion originally forecast.
BBBY’s Ongoing Efforts
Management is making good headway with the transformation strategy, which includes initiatives to optimize store fleets and refurbishment plans.
Also noteworthy is BBBY’s recent partnership with Kroger (KR), through which the former’s items will be accessible for purchase on Kroger.com and in a few Kroger locations beginning in 2022. Bed Bath & Beyond might benefit from Kroger’s online platform by extending its client base, and as a result, growing its top line.
However, it remains to be seen if BBBY’s continuing strategic restructuring program, strong digital development, and attempts to expand its Owned Brands will be enough to bring the firm out of this mess and offer a positive impact on stock prices.
Analysts Weigh Out
The company’s Q3 earnings figures disappointed the majority of analysts, who sold BBBY out of their portfolios.
According to analyst Anthony Chukumba of Loop Capital, BBBY’s performance in Q3 went “from bad to worse,” with “substantial” revenue, profitability, and profits failures.
Chukumba continues that Bed Bath’s problems stem mostly from the company’s loss of market share and inability to build deeper consumer connections, neither of which will be “easy to regain.”
As a consequence, the analyst maintained his Sell rating on BBBY stock and cut his price target to $10.00 from $14.00.
Wall Street Remains Cautious
On TipRanks, Bed Bath & Beyond stock commands a Moderate Sell consensus rating based on 1 Buy, 4 Holds, and 7 Sells. As for price targets, the average BBBY stock price prediction of $13.05 implies almost 5.4% downside potential from the current levels.
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Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
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