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Bed Bath & Beyond (BBBY) Q3 Loss Wider Than Expected, Sales Lag
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Bed Bath & Beyond Inc. has continued its dry spell with dismal third-quarter fiscal 2022 results. Both top and bottom lines not only missed the Zacks Consensus Estimate but also declined year over year. Although the company made efforts to change the assortment, and other merchandising and marketing strategies, inventory constraints acted as headwinds.
The home goods retailer is reeling under dwindling cash position as suppliers demanded stringent payment terms right before the pivotal holiday shopping season. Also, fewer products on its shelves led to reduced customer traffic.
Management noted that it intends to lay off more employees to reduce costs. Earlier, it announced to close 150 stores and lay off 20% of its corporate and supply-chain workforce. Also, the company failed to convince bondholders to swap out their investments for new debt.
In a recent development, BBBY revealed that it is exploring options, including bankruptcy, after continuous weak sales performance. That said, the company is leaving no stone unturned to increase in-stock levels to meet demand via using liquidity it gained from holiday sales.
Image Source: Zacks Investment Research
Consequently, shares of the company have plunged 59.1% in the past three months compared with the industry’s growth of 17.9%. However, shares of the Zacks Rank #3 (Hold) company moved up nearly 28% after the close of the trading session on Jan 10. This might be due to rumors of its bankruptcy, which makes it a potential acquisition target.
Q3 in Detail
Bed Bath & Beyond reported an adjusted loss of $3.65 per share in the fiscal third quarter compared with a loss of 25 cents in the year-ago quarter. The figure was also wider than the Zacks Consensus Estimate of a loss of $2.36.
Net sales of $1,259 million declined 33% year over year and missed the Zacks Consensus Estimate of $1,379 million. Comparable sales (comps) fell 32% year over year. For stores, comps declined 31% year over year, while the same dropped 33% across the digital channel.
The Bed Bath & Beyond banner’s comparable sales fell 34% year over year, while the buybuy BABY banner’s comparable sales declined year over year in the low twenties.
The adjusted gross profit slumped 57.4% to $287.4 million in the fiscal third quarter. Also, the adjusted gross margin contracted 1310 basis points (bps) to 22.8% due to the adverse impacts of Owned Brands’ clearance activity and higher promotional.
SG&A expenses slumped 16.3% to $583.6 million in the reported quarter, driven by cost optimization plans. SG&A expenses, as a percentage of sales, expanded 1070 bps year over year to 46.3%. The company is on track to meet its target of a SG&A expense reduction of $250 million.
Adjusted EBITDA was loss of $225 million against earnings of $40.6 million reported in the year-ago period. The decline was mainly due to sluggish sales and dismal margins.
Financial Position
Bed Bath & Beyond ended the fiscal third quarter with cash and investments of $153.5 million. Long-term debt was $1,935.4 million and the total shareholders' deficit was $798.6 million as of Nov 26, 2022. It also had a strong liquidity of $0.5 billion as of Nov 26, 2022.
In the fiscal third quarter, cash used in operating activities was $307.6 million and capital expenditure was $95.6 million.
Bed Bath & Beyond Inc. Price, Consensus and EPS Surprise
In the fiscal third quarter, it closed six stores. As of Nov 26, 2022, the company had 949 stores in operation, comprising 762 namesake stores across 50 states, the District of Columbia, Puerto Rico and Canada; 137 buybuy BABY stores; and 50 stores under Harmon, Harmon Face Values or Face Values names. Additionally, the company’s joint venture operates 12 flagship stores in Mexico.
Tecnoglass, the manufacturer and seller of architectural glass and windows, and aluminum products for the residential and commercial construction industries, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TGLS’ 2023 sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago period’s reported levels. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.
Ross Stores, an off-price retailer of apparel and home accessories in the United States, currently sports a Zacks Rank #2 (Buy). ROST has an expected EPS growth rate of 10.5% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current-year sales and EPS suggests declines of 1.6% and 11.7%, respectively, from the year-ago period’s reported figures. ROST has a trailing four-quarter earnings surprise of 10.5%, on average.
Wingstop, the operator of franchises and restaurants, currently carries a Zacks Rank #2. WING has a long-term earnings growth rate of 11%.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the year-ago period’s reported levels.
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Bed Bath & Beyond (BBBY) Q3 Loss Wider Than Expected, Sales Lag
Bed Bath & Beyond Inc. has continued its dry spell with dismal third-quarter fiscal 2022 results. Both top and bottom lines not only missed the Zacks Consensus Estimate but also declined year over year. Although the company made efforts to change the assortment, and other merchandising and marketing strategies, inventory constraints acted as headwinds.
The home goods retailer is reeling under dwindling cash position as suppliers demanded stringent payment terms right before the pivotal holiday shopping season. Also, fewer products on its shelves led to reduced customer traffic.
Management noted that it intends to lay off more employees to reduce costs. Earlier, it announced to close 150 stores and lay off 20% of its corporate and supply-chain workforce. Also, the company failed to convince bondholders to swap out their investments for new debt.
In a recent development, BBBY revealed that it is exploring options, including bankruptcy, after continuous weak sales performance. That said, the company is leaving no stone unturned to increase in-stock levels to meet demand via using liquidity it gained from holiday sales.
Image Source: Zacks Investment Research
Consequently, shares of the company have plunged 59.1% in the past three months compared with the industry’s growth of 17.9%. However, shares of the Zacks Rank #3 (Hold) company moved up nearly 28% after the close of the trading session on Jan 10. This might be due to rumors of its bankruptcy, which makes it a potential acquisition target.
Q3 in Detail
Bed Bath & Beyond reported an adjusted loss of $3.65 per share in the fiscal third quarter compared with a loss of 25 cents in the year-ago quarter. The figure was also wider than the Zacks Consensus Estimate of a loss of $2.36.
Net sales of $1,259 million declined 33% year over year and missed the Zacks Consensus Estimate of $1,379 million. Comparable sales (comps) fell 32% year over year. For stores, comps declined 31% year over year, while the same dropped 33% across the digital channel.
The Bed Bath & Beyond banner’s comparable sales fell 34% year over year, while the buybuy BABY banner’s comparable sales declined year over year in the low twenties.
The adjusted gross profit slumped 57.4% to $287.4 million in the fiscal third quarter. Also, the adjusted gross margin contracted 1310 basis points (bps) to 22.8% due to the adverse impacts of Owned Brands’ clearance activity and higher promotional.
SG&A expenses slumped 16.3% to $583.6 million in the reported quarter, driven by cost optimization plans. SG&A expenses, as a percentage of sales, expanded 1070 bps year over year to 46.3%. The company is on track to meet its target of a SG&A expense reduction of $250 million.
Adjusted EBITDA was loss of $225 million against earnings of $40.6 million reported in the year-ago period. The decline was mainly due to sluggish sales and dismal margins.
Financial Position
Bed Bath & Beyond ended the fiscal third quarter with cash and investments of $153.5 million. Long-term debt was $1,935.4 million and the total shareholders' deficit was $798.6 million as of Nov 26, 2022. It also had a strong liquidity of $0.5 billion as of Nov 26, 2022.
In the fiscal third quarter, cash used in operating activities was $307.6 million and capital expenditure was $95.6 million.
Bed Bath & Beyond Inc. Price, Consensus and EPS Surprise
Bed Bath & Beyond Inc. price-consensus-eps-surprise-chart | Bed Bath & Beyond Inc. Quote
Store Updates
In the fiscal third quarter, it closed six stores. As of Nov 26, 2022, the company had 949 stores in operation, comprising 762 namesake stores across 50 states, the District of Columbia, Puerto Rico and Canada; 137 buybuy BABY stores; and 50 stores under Harmon, Harmon Face Values or Face Values names. Additionally, the company’s joint venture operates 12 flagship stores in Mexico.
Stocks to Consider
Here are three better-ranked stocks to consider, namely Wingstop (WING - Free Report) , Ross Stores (ROST - Free Report) and Technoglass (TGLS - Free Report) .
Tecnoglass, the manufacturer and seller of architectural glass and windows, and aluminum products for the residential and commercial construction industries, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TGLS’ 2023 sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago period’s reported levels. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.
Ross Stores, an off-price retailer of apparel and home accessories in the United States, currently sports a Zacks Rank #2 (Buy). ROST has an expected EPS growth rate of 10.5% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current-year sales and EPS suggests declines of 1.6% and 11.7%, respectively, from the year-ago period’s reported figures. ROST has a trailing four-quarter earnings surprise of 10.5%, on average.
Wingstop, the operator of franchises and restaurants, currently carries a Zacks Rank #2. WING has a long-term earnings growth rate of 11%.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the year-ago period’s reported levels.