Shares of Bed Bath & Beyond Inc. (BBBY, Financial) soared more than 17% in after-hours trading on Wednesday despite reporting mediocre third-quarter 2018 results.
The New Jersey-based retailer of home goods posted earnings of 18 cents per share, narrowly beating Refinitiv’s estimates of 17 cents. Revenue grew 2.6% from the prior-year quarter to $3.03 billion, just shy of the $3.04 billion expected.
Same-store sales declined 1.8% from a year ago, which was greater than the 0.3% decline analysts had forecast.
Despite the weak results, shares rose when the retailer revealed it is ahead of its long-term financial goals of slowing down declines in operating profit and net earnings per share over the next two years and increasing them in 2020. The company also expects 2019 earnings to be about the same as in 2018 at $2 per share, topping Wall Street’s projections of $1.57 per share.
In regard to the strategic initiatives the company is making to drive growth and compete with rivals like Amazon.com Inc. (AMZN, Financial) and Wayfair Inc. (W, Financial), CEO Steve Tamares said on a conference call with analysts he is anticipating them to “gain even more momentum and accelerate” in 2019. As part of this effort, Bed Bath & Beyond has been heavily investing in revamping its stores, digital platforms and loyalty programs as well as expanding its decorative furnishing business.
"Next year, we believe that to a greater degree, we'll be able to leverage a lot of the investments that we've been making both in technology and in people to be able to enhance the profitability,” he said.
The stock’s rally continued into Thursday morning, while shares of other retailers, including Kohl's (KSS, Financial), Macy's (M, Financial), J.C. Penney (JCP, Financial), Walmart (WMT, Financial) and Target (TGT, Financial), fell on disheartening overall holiday sales. With a market cap of $1.83 billion, shares of Bed Bath & Beyond were up 7.83% at $13.22 on Thursday. According to GuruFocus, the stock tumbled nearly 50% in 2018.
Separately, Bed Bath & Beyond’s board of directors announced a dividend of 16 cents per share, which will be distributed on April 16 to shareholders of record as of March 15. The company repurchased roughly $8 million worth of stock during the quarter.
Disclosure: No positions.
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