Bed Bath and Beyond Comes Up Shy of Wall Street Predictions

Andrew Klips |

Bed Bath and Beyond Comes Up Shy of Wall Street PredictionsShares of retail chain Bed Bath and Beyond (BBBY) tumbled as much as 9.6 percent in early trading today as the Union, New Jersey-based company whiffed on analyst profit expectations in its latest quarterly earnings. Aiming to drive traffic to its locations, the home furnishings company resorted to discount coupons and lower prices which cut into profits a bit more than expected.

Fiscal second quarter profit demurred to $224.3 million, or 98 cents a share, from $229.4 million, or 93 cents, in the year prior quarter. In June, the company said that it was anticipating earnings of 97 cents to $1.03 per share and revenue growth between five and seven percent. Analysts polled by FactSet and Thomson Reuters were calling for $1.02 per share.

Revenue topped analyst predictions of $2.56 billion as it rose 12 percent to $2.59 billion from $2.31 billion a year ago.

Selling, general and administrative costs rose 15 percent. Same store sales rose 3.5 percent compared to the year earlier quarter; missing analyst estimates of 3.8 percent growth.

The results could be a bit difficult to decipher because of two major acquisitions in June by BB&B. The company bought discount chain Cost Plus Inc. in a deal valued at $550 million and Linen Holdings LLC, a privately-held linens distributor, for about $105 million. Upon closing the Cost Plus acquisition, Bed Bath and Beyond warned that the merger could carve into financials for the second quarter because of the associated costs.

For its fiscal third quarter, Bed Bath & Beyond said it expects to earn 99 cents a share to $1.04, basically in line with analysts. The company raised its revenue outlook going forward, saying that it expects net sales to increase by 15 percent to 18 percent during the third quarter and by 24 percent to 26 percent in the last quarter of the year.

Further, the company said that it will be conducting technology updates on its website, invest in online fulfillment and launching a specialty food and beverage section in its stores, a benefit from the Cost Plus purchase, as it looks to capture more of the market.

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Companies

Symbol Name Price Change % Volume
BBBY Bed Bath & Beyond Inc. 43.50 0.07 0.16 2,791,164
TSO Tesoro Corporation 83.61 0.66 0.80 2,227,209

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