Bed Bath & Beyond Shares Sink After Company Reports Dismal Earnings

Shares of Bed Bath & Beyond were sinking over 25% on Thursday morning after the company said it saw a big drop-off in traffic in August, creating a blow to its fiscal second quarter financial results.

The big-box retailer said it has been dealing with industrywide supply chain complications, which Chief Executive Mark Tritton considers “pervasive.”

Next to the poor quarterly report, the company also cut its revenue and earnings outlook for the year, and its third-quarter guidance also looks underwhelming.

Tritton has said that the company’s costs escalated over the summer months, especially toward the end of its second quarter in August, eating into sales and profits.

For the second quarter ended Aug. 28, the company reported EPS of 4 cents adjusted compared to 52 cents that was expected per Refinitiv.

Revenue at $1.99 billion was also below the $2.06 billion that had been expected. This was also a drop of 26% from a year earlier.

In the latest period, Bed Bath & Beyond lost $73.2 million, or 72 cents per share, compared with net income of $217.9 million, or $1.75 per share, a year earlier.

“While our results this quarter were below expectations, we remain confident in our multi-year transformation,” Tritton said in a press release.

Tritton links the summer failure to Covid-19 fears reemerging amid the spreading delta variant. In states such as Florida, Texas and California, the business was hurt due to the rising number of coronavirus cases in the region, Tritton said.

According to Wells Fargo retail analyst Zachary Fadem, Bed Bath & Beyond’s problems in the second quarter “undeniably casts doubt” on the company’s ability to deliver on its multi-year turnaround roadmap.

“After several encouraging steps forward, Bed Bath & Beyond took a big step back in Q2,” Fadem said in a note to clients.

Looking ahead, Bed Bath & Beyond expects third-quarter adjusted earnings to be between breakeven and 5 cents per share, with sales ranging from $1.96 billion to $2 billion. Analysts had been looking for earnings of 28 cents per share on sales of $2.02 billion, according to Refinitiv data.

For the full year, the company slashed its expectations and is now looking to earn between 70 cents and $1.10 per share, on an adjusted basis, on sales of $8.1 billion to $8.3 billion.
Previously, it was calling for annual adjusted earnings of between $1.40 and $1.55 per share, on sales of $8.2 billion to $8.4 billion.

Analysts were forecasting adjusted earnings per share of $1.51 on revenue of $8.31 billion in fiscal 2021.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.