Bed, Bath & Beyond Reports Another Huge Earnings Miss

For the second consecutive quarter, Bed Bath & Beyond Inc. (BBBY) stock is down double digits following a disappointing earnings report. The stock plummeted more than 14 percent on Wednesday morning after the company missed second-quarter earnings estimates and issued disappointing full-year guidance.

Bed Bath & Beyond reported second-quarter earnings per share of 67 cents on revenue of $2.9 billion. Both numbers missed consensus Wall Street expectations of 95 cents and $3 billion, respectively. Comparable store sales declined 2.6 percent in the second quarter, well below consensus analyst estimates of a 0.7 percent drop.

Bed Bath & Beyond also slashed its full-year EPS guidance to $3, nowhere near consensus expectations of $4.01.

In a statement, the company tried to put a positive spin on yet another lackluster quarter, telling investors that it is “undertaking a number of transformational initiatives” that “should produce savings in excess of $150 million over the next few years.” The company also blames Hurricane Harvey and new accounting standards for its weak performance.

On the earnings call, CEO Steven Temares said the company’s initiatives focus on customer service, margin improvement, supply chain efficiency and inventory optimization.

However, Bank of America analyst Curtis Nagle says the costs associated with these initiatives will dwarf any potential savings.

“While BBBY is targeting $150 million in cost savings over the next few years, it has not specified what the net impact will be, and we believe it will be more than overwhelmed by ongoing fixed-cost deleverage and online investments,” Nagle says.

“We see ongoing risk to guidance and estimates driven by modest traffic trends and continued pressure to sales and margins from online competition.”

UBS analyst Michael Lasser says it’s difficult to find much to like about Bed Bath & Beyondat the moment.

“[Bed Bath & Beyond’s] recent results demonstrate that its business model is struggling to adapt to the rapidly evolving Home Furnishings retail landscape,” Lasser says. “While it’s working on new initiatives such as higher furniture [stock-keeping units] and more personalization, we just don’t think…

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