Bed Bath & Beyond Inc. (BBBY - Free Report) has been losing investors’ confidence of late, thanks to its bleak performance in the third quarter of fiscal 2019. Also, the company stated that sales and profitability are likely to remain under pressure in fiscal fourth quarter, which hurt investors’ sentiments. Markedly, shares of this Zacks Rank #5 (Strong Sell) company have tumbled almost 19% following the earnings announcement on Jan 8.
In the past month, the company’s shares have declined 7.1% against the industry's rise of 1.4%.
Meanwhile, analysts are pessimistic about the stock’s future performance as evident from downward revisions in the Zacks Consensus Estimate. The current Zacks Consensus Estimates of $1.17 for fiscal 2019 and $1.39 for fiscal 2020 have declined roughly 39% and 31%, respectively, in the past 30 days. Also, the consensus mark of $1.11 for fiscal fourth-quarter earnings declined 24% over the same time frame.
Results were hurt by the calendar shift for the Thanksgiving holiday in 2019. Also, its business faced challenges from certain self-inflicted issues such as non-competitive pricing, weak inventory management and dearth of convenient shopping options such as BOPUS. (Read: Bed Bath & Beyond Stock Down on Q3 Loss, Sales Miss)
Also, the company’s unimpressive comparable sales (comps) run continued in the quarter, mainly due to fall in the number of store transactions. Comps in fiscal third quarter fell 8.3%, wider than declines of 6.7% and 6.6% in the preceding two quarters. This has been exerting pressure on the top line, which dropped 9%. Evidently, the company delivered sixth straight sales miss in fiscal third quarter.
The aforesaid factors make us apprehensive about the stock’s performance at present. Certainly, the company is focusing on cost containment, refining organization structure, reviewing and optimizing asset base, and learnings from Next Generation Lab stores. Despite these efforts, industry experts believe that the company has to redefine its business model and make it more contemporary with the present retail scenario to withstand competition. From embracing new technologies to providing fast delivery and from bringing in new marketing strategies to innovative products, the company has to look at every nook and cranny.
Stocks to Maximize Portfolio Returns
DICK'S Sporting Goods, Inc (DKS - Free Report) has trailing four-quarter positive surprise of 11.5%, on average. The company outpaced earnings estimates in three of the last four quarters. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hibbett Sports, Inc (HIBB - Free Report) , also a Zacks Rank #1 stock, has an expected long-term earnings growth rate of 12.2%.
Chico's FAS, Inc. (CHS - Free Report) has an impressive long-term earnings growth rate of 15% and a Zacks Rank of 1.
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