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Omar Venerio
Omar Venerio
Articles (1697) 

Thursday Morning Market Highlights

Markets in the red, Bed Bath & Beyond plummets on earnings

US markets

U.S. stocks were in the red on Thursday morning. The Dow fell more than 400 points to 25,584, the S&P 500 index lost 1.42% to 3,124 and the Nasdaq Composite Index was down 0.70% to 10,419.

Gainers

• F5 Networks, Inc. (FFIV) +5.5%

• Pentair plc (NYSE:PNR) +5%

• Advanced Micro Devices, Inc. (NASDAQ:AMD) +3.7%

• Costco Wholesale Corporation (NASDAQ:COST) +2.6%

Losers

• Mohawk Industries, Inc. (NYSE:MHK) -23%

• Walgreens Boots Alliance, Inc. (NASDAQ:WBA) -9.8%

• Leggett & Platt, Incorporated (NYSE:LEG) -7.3%

• Kohl's Corporation (NYSE:KSS) -6.8%

Global markets

The main European stock markets traded in the red.The UK's FTSE 100 fell 1.78%, France's CAC 40 retreated 1.29%, Germany's Dax was down 0.16% and Spain's Ibex 35 slid 1.33%.

In Asia, Japan's Nikkei 225 gained 0.40%, India’s BSE Sensex gained 1.12%, Hong Kong's Hang Seng advanced 0.31% and China's Shanghai Composite was up 1.39%.

Bed Bath & Beyond releases earnings report

Shares of Bed Bath & Beyond Inc. (NASDAQ:BBBY) fell more than 20% on Thursday morning after the company announced its fiscal first-quarter results the previous day. The company posted a loss per share of $1.96, falling short analysts’ estimatesby 64 cents. Revenue of $1.31 billion declined 49.0% year-over-year and fell short of expectations by $80 million.

CEO Mark Tritton had the following to say:

"The impact of the COVID-19 situation was felt across our business during our fiscal first quarter, including loss of sales due to temporary store closures and margin pressure from the substantial channel shift to digital. From the beginning of this crisis, we have taken measured, purposeful steps to help keep our people safe and our customers serviced, and we are proud of the way our teams have navigated this unprecedented challenge with speed and agility. At the same time, our actions to strengthen our financial position and liquidity are enhancing our flexibility and capacity to invest and rebuild our business for long-term success.”

Net sales were $1.3 billion, a decrease of 49% compared to the prior-year period. By segment, net sales from digital channels were up 82%, while net sales from stores were down 77%. Net sales from digital channels were about two-thirds of the total net sales.

The gross margin was down 780 basis points to 26.7%, negatively impacted by channel and product mix, higher costs, lower margin and the deleverage of fixed expenses.

The company plans to cut annual costs by $250 million to $300 million by closing 200 stores in the U.S. and Canada.

Looking at the financial position, the company had approximately $1.2 billion in cash and investments at the end of the quarter. Also, it announced new debt from an $850 million three-year secured asset-based revolving credit facility.

Lee Ainslie (Trades, Portfolio) initiated a new position of 98,384 shares in the firm during the first quarter. Jim Simons (Trades, Portfolio) added 22% to his investment for a total of 2,041,212 shares, while Barrow, Hanley, Mewhinney & Strauss boosted the position by 5% to 1,226 shares. Mairs and Power (Trades, Portfolio) sold out the stock.

Disclosure: The author holds no positions in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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