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Bear of the Day: Bed Bath & Beyond (BBBY)

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Founded in 1971, Bed Bath & Beyond (BBBY - Free Report) is an omnichannel retailer offering a wide selection of domestic merchandise and home furnishings.

As of Mar 3, 2018, the company operated 1,552 across 50 states, DC, Puerto Rico and Canada, including its namesake stores as well as stores under other names.

Lackluster Results and Guidance Reflect Rising Challenges

The company reported fourth-quarter fiscal 2017 results last week. While they beat our estimates on the top and bottom lines, comps declined due to the lower number of store transactions, which was somewhat offset by higher average transaction amounts.

Guidance was weaker than street estimates.

Shares plunged after the report.

Falling Estimates

Analysts have slashed their estimates for the company after weak guidance.  Zacks Consensus Estimates for the current and next fiscal year have fallen to $2.36 per share and $2.02 per share from $2.76 and $2.53 respectively, before the results.

Falling estimates sent the stock to a Zacks Rank #5 (Strong Sell).

Bottom Line

In addition to disappointing foot traffic in malls, the retail space is going through a shift toward online shopping, particularly from Amazon. With tightening labor markets, wage pressure has also started hurting retailers.

The stock is down about 19% year-to-date but a rebound any time soon does not appear likely.


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