Bed Bath & Beyond Inc. (BBBY, Financial) reported its third-quarter 2018 earnings on Jan. 9. The company had high expenses during the quarter, which took a toll on its bottom line.
Snapshot of the quarter
For the quarter, the home goods retailer’s earnings per share stood at 18 cents, beating analysts' expectations by one cent. Revenue amounted to $3.03 billion, which fell short of the $3.04 billion estimate. Furthermore, the company recorded a decline in comparable store sales of 1.8% year over year, which was steeper than the projected 0.3% decline.
The gross profit came in at $1003.7 million, down 3.6% from the year-ago quarter due to a lower merchandise margin and high finance costs. Selling, general and administrative expenses rose 2.3%. Consequently, the company’s operating profit plummeted roughly 54.3% to $49.5 million.
At the end of the quarter, the company’s balance of cash and investments stood at a combined $1 billion. Its long-term debt was $1.5 billion while shareholders’ equity totaled $2.9 billion.
Strategic initiatives
As part of its initiative to more effectively compete against other retailers like Amazon (AMZN, Financial), Bed Bath & Beyond is currently focusing on enhancing its website. In regard to the company's plans, CEO Steven Temares said on a conference call:
“This new service-based architecture has a responsive design that enables us to change and deploy new sections or features within and across all of our web channels quite quickly and cost effectively," he said. "For our customers, FEO will create a better shopping experience with improved page load performance and a cleaner, more contemporary website design.”
The retailer is also working on a concept called lab stores. The company has identified approximately 40 Bed Bath & Beyond locations that it will transform into lab stores to support the company’s next-generation store initiative. It plans to test visual merchandising and make several modifications inside the store, including displays, decorations, signs and layout of the space, to lure customers. As part of the physical store transformation efforts, the company also plans to introduce six private-label home décor lines.
Guidance
Bed Bath & Beyond also provided guidance for full fiscal 2018. The company projects consolidated net sales will plunge in the low single-digits and comps will decline 1%. Earnings per share for the year are expected to be around $2.Ă‚
Disclosure: I do not hold any positions in the stocks mentioned.
Read more here:
