Bed Bath and Beyond Inc. (BBBY, Financial) reported its third-quarter earnings after the market closed on Dec. 20.
The New Jersey-based retailer posted earnings per share of 44 cents, beating estimates of 37 cents. Revenue of $3 billion beat expectations of $2.9 billion and was relatively flat from the prior-year quarter.
Same-store sales declined 0.3% from a year ago, a narrower loss than anticipated by analysts. The company said while comparable sales from digital channels continued to show strong growth, comparable sales in its stores witnessed a low single-digit decline.
The trend in Bed Bath and Beyond’s revenue over the past decade is illustrated in the graph below.
Despite the beat, shares fell more than 3% in after-hours trading. The stock closed at $24.57 on Wednesday.
The company said its performance for the quarter was impacted by restructuring costs, Hurricane Harvey and a new accounting standard.
In a conference call on Wednesday, CEO Steven Temares commented on the changing retail environment.
"How [customers] discover product, their expectations and knowledge around pricing and services offered, and how they share their thoughts about their shopping experiences are all changing rapidly,” he said.
He then outlined four initiatives the company is pursuing in order to meet changing customer needs, improve margins, improve the supply chain and optimize inventory. Among these initiatives are adopting a new technology model, hiring a new chief information officer and the company’s first chief technology officer and establishing a strategic portfolio management office.
“We have made considerable progress in our ability to align the organizational resources to accelerate our strategic priorities,” he said. “Each of the initiatives we are working on has its own framework and structure built around cross-functional coordination to expedite results, to further our mission and to drive greater efficiencies to achieve operational excellence.”
The company expects EPS for the full year to be around $3, which is lower than the consensus estimate of $3.12. Comparable sales are anticipated to decline in the low single digits.
The retailer also declared a quarterly dividend of 15 cents per share, which is payable on April 17, 2018 to shareholders of record as of March 16. It repurchased approximately $24 million worth of its common stock during the quarter.
With 6.14% of outstanding shares, Hotchkis & Wiley has the largest position in Bed Bath and Beyond among the gurus. Jim Simons (Trades, Portfolio), Ray Dalio (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), George Soros (Trades, Portfolio), David Dreman (Trades, Portfolio) and Barrow, Hanley Mewhinney and Strauss are also shareholders.
With a market cap of $3.11 billion, Bed Bath and Beyond was trading around $21.71 on Thursday with a price-earnings ratio of 5.60, a price-book ratio of 1.14 and a price-sales ratio of 0.26. GuruFocus estimates the stock has lost approximately 41% year to date.
Disclosure: I do now own any stocks mentioned.
