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Here's What Lies in Store for Bed Bath & Beyond (BBBY) Stock
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Bed Bath & Beyond Inc. has been on track with its three-year transformation plan, including store fleet-optimization efforts, store remodeling programs, the launch of ten Owned Brands and enhanced digital capabilities. Notably, it launched private-label brands (Owned Brands), including Nestwell, Haven and Simply Essential, Wild Sage, Our Table, Squared Away, Studio 3B, and H for Happy. The transformation plans generated $1.3 billion in sales in the first year of transformation. Also, a strategic restructuring program bodes well.
The company’s Store Network Optimization project aims at expanding store count and increasing productivity of existing stores. This is likely to generate savings of $100 million on an annual basis. It is also progressing well with the store remodeling program, wherein proof-of-concept stores will showcase destination categories, bed, bath, kitchen, and storage products. This three-year-long plan will be executed across more than 450 stores, accounting for nearly 60% of its sales.
As part of its efforts to rebuild its business foundation and create a durable business model, Bed Bath & Beyond announced a strategic restructuring program to reorganize and simplify field operations, reduce management positions and outsource several functions. The company intends to expedite the comprehensive restructuring program to improve profits over the next two to three years. In this regard, adjusted EBITDA is anticipated to be $250-$350 million. Additionally, it anticipates realizing savings of $200-$250 million through cost-cutting actions and reduced discretionary costs, as well as renegotiations with existing vendors. Out of these cost savings, management intends to reinvest $150-$200 million in future initiatives.
The company has also ramped up digital efforts with the expansion of e-commerce offerings and the introduction of a loyalty program, namely Beyond+, which offers a 20% discount on all purchases, as well as free standard shipping, the rollout of buy online and pick up in store, and same-day delivery services. Earlier, it entered the next phase of its supply-chain modernization with the Ryder partnership and expanded its same-day delivery service via a partnership with Roadie. The company is also on track with enabling cross-banner browsing across Bed Bath & Beyond, buybuy BABY, and Harmon brands.
In a recent development, the company added activist investor Ryan Cohen to its board and is looking into his proposal of selling the buybuy Baby division. The move will likely help in generating cash for other growth ventures.
On its last reported quarter’s earnings call, management expected BABY sales to grow more than $1.5 billion in the next three years, driven by the Kroger (KR - Free Report) deal. As part of the deal, Bed Bath & Beyond’s most sought-after home and baby products such as bedding, storage, baby furniture and gear from Bed Bath & Beyond, buybuy Baby, Owned Brands and other national brands are now available at Kroger.com and a few Kroger stores, thus expanding its base.
Cohen highlighted some other notable efforts to be undertaken for a successful turnaround, including maintaining inventory mix and improving the supply chain to meet demand.
Keeping in these lines, BBBY is reeling under rising freight costs stemming from the industry-wide supply-chain constraints. As a result, the company has been unable to fulfill orders despite strong demand due to the lack of product availability. This, along with rising digitization and new competitors, lured customers away from BBBY.
Consequently, on its last earnings report, management slashed the fiscal 2021 view. Bed Bath & Beyond envisioned net sales of $7.9 billion for fiscal 2021, down from the previously mentioned $8.1-$8.3 billion. It also expected adjusted earnings between a loss of 15 cents to breakeven, down from the earlier stated earnings of 7-10 cents for fiscal 2021. For fourth-quarter fiscal 2021, the company anticipated comp sales to decline in the high-single digits. The adjusted gross margin was envisioned to be 32.5-33%, reflecting the adverse impacts of global supply-chain challenges. Adjusted earnings were expected between breakeven and 15 cents for the said quarter.
Wrapping Up
Image Source: Zacks Investment Research
We believe that the latest addition of Cohen to its board and his value-added proposals, coupled with Bed Bath & Beyond’s other strategic efforts, will help BBBY stock get back on track. In the past three months, shares of this Zacks Rank #3 (Hold) company have risen 46.2% against the industry’s decline of 12.1%.
The Zacks Consensus Estimate for Nordstrom’s current financial-year sales and EPS suggests growth of 5.7% and 180%, respectively, from the year-ago period’s reported numbers. JWN has an expected EPS growth rate of 6% for three-five years.
Target currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the year-ago period’s reported figures. TGT has an expected EPS growth rate of 16.5% for three-five years.
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Here's What Lies in Store for Bed Bath & Beyond (BBBY) Stock
Bed Bath & Beyond Inc. has been on track with its three-year transformation plan, including store fleet-optimization efforts, store remodeling programs, the launch of ten Owned Brands and enhanced digital capabilities. Notably, it launched private-label brands (Owned Brands), including Nestwell, Haven and Simply Essential, Wild Sage, Our Table, Squared Away, Studio 3B, and H for Happy. The transformation plans generated $1.3 billion in sales in the first year of transformation. Also, a strategic restructuring program bodes well.
The company’s Store Network Optimization project aims at expanding store count and increasing productivity of existing stores. This is likely to generate savings of $100 million on an annual basis. It is also progressing well with the store remodeling program, wherein proof-of-concept stores will showcase destination categories, bed, bath, kitchen, and storage products. This three-year-long plan will be executed across more than 450 stores, accounting for nearly 60% of its sales.
As part of its efforts to rebuild its business foundation and create a durable business model, Bed Bath & Beyond announced a strategic restructuring program to reorganize and simplify field operations, reduce management positions and outsource several functions. The company intends to expedite the comprehensive restructuring program to improve profits over the next two to three years. In this regard, adjusted EBITDA is anticipated to be $250-$350 million. Additionally, it anticipates realizing savings of $200-$250 million through cost-cutting actions and reduced discretionary costs, as well as renegotiations with existing vendors. Out of these cost savings, management intends to reinvest $150-$200 million in future initiatives.
The company has also ramped up digital efforts with the expansion of e-commerce offerings and the introduction of a loyalty program, namely Beyond+, which offers a 20% discount on all purchases, as well as free standard shipping, the rollout of buy online and pick up in store, and same-day delivery services. Earlier, it entered the next phase of its supply-chain modernization with the Ryder partnership and expanded its same-day delivery service via a partnership with Roadie. The company is also on track with enabling cross-banner browsing across Bed Bath & Beyond, buybuy BABY, and Harmon brands.
In a recent development, the company added activist investor Ryan Cohen to its board and is looking into his proposal of selling the buybuy Baby division. The move will likely help in generating cash for other growth ventures.
On its last reported quarter’s earnings call, management expected BABY sales to grow more than $1.5 billion in the next three years, driven by the Kroger (KR - Free Report) deal. As part of the deal, Bed Bath & Beyond’s most sought-after home and baby products such as bedding, storage, baby furniture and gear from Bed Bath & Beyond, buybuy Baby, Owned Brands and other national brands are now available at Kroger.com and a few Kroger stores, thus expanding its base.
Cohen highlighted some other notable efforts to be undertaken for a successful turnaround, including maintaining inventory mix and improving the supply chain to meet demand.
Keeping in these lines, BBBY is reeling under rising freight costs stemming from the industry-wide supply-chain constraints. As a result, the company has been unable to fulfill orders despite strong demand due to the lack of product availability. This, along with rising digitization and new competitors, lured customers away from BBBY.
Consequently, on its last earnings report, management slashed the fiscal 2021 view. Bed Bath & Beyond envisioned net sales of $7.9 billion for fiscal 2021, down from the previously mentioned $8.1-$8.3 billion. It also expected adjusted earnings between a loss of 15 cents to breakeven, down from the earlier stated earnings of 7-10 cents for fiscal 2021. For fourth-quarter fiscal 2021, the company anticipated comp sales to decline in the high-single digits. The adjusted gross margin was envisioned to be 32.5-33%, reflecting the adverse impacts of global supply-chain challenges. Adjusted earnings were expected between breakeven and 15 cents for the said quarter.
Wrapping Up
Image Source: Zacks Investment Research
We believe that the latest addition of Cohen to its board and his value-added proposals, coupled with Bed Bath & Beyond’s other strategic efforts, will help BBBY stock get back on track. In the past three months, shares of this Zacks Rank #3 (Hold) company have risen 46.2% against the industry’s decline of 12.1%.
Stocks to Consider
Some better-ranked stocks to consider are Nordstrom (JWN - Free Report) and Target (TGT - Free Report) .
Nordstrom presently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 13.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nordstrom’s current financial-year sales and EPS suggests growth of 5.7% and 180%, respectively, from the year-ago period’s reported numbers. JWN has an expected EPS growth rate of 6% for three-five years.
Target currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the year-ago period’s reported figures. TGT has an expected EPS growth rate of 16.5% for three-five years.