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Mayank Marwah
Mayank Marwah
Articles (687) 

Bed Bath & Beyond Posts Earnings Beat

Revenue misses expectations

April 11, 2019 | About:

Bed Bath & Beyond Inc. (NASDAQ:BBBY) released its fourth-quarter and full-year 2018 earnings after the market closed on April 10. While earnings edged past Zacks' consensus estimate, revenue missed expectations.

The company’s brick-and-mortar sales plunged drastically amid its turnaround efforts, while online sales were not strong enough to offset the decline.

Snapshot of the quarter

The big-box home goods retailer posted earnings of $1.20 per share, which was 8 cents more than what Wall Street forecasted. Revenue of $3.31 billion decreased 11% as a result of one less selling week as compared to the prior-year quarter. Comps declined 1.4%, which was more than the projected 1.3% decline.

The gross profit tumbled 14% to $1.15 billion, while the gross margin plummeted 120 basis points to 34.7% as a result of a lower merchandise margin as well as mounting coupon expenses. Selling, general and administrative expenses declined 6.3% to $933.7 million. Adjusted operating profit tumbled 49.3% to $213.2 million.

As of the quarter ended March 2, the company had cash and investments of roughly $1 billion. Long-term debt stood at $1.5 billion.

Efforts

The home and housewares retailer is working to grow revenue by emphasizing on portfolio strategy alignment that comprises product assortment, customer engagement, implementing strategies from its Next Generation Lab stores and increasing its digital experience. The company also plans to reorganize its labor model and reduce its occupancy expenses in order to optimize SG&A expenses.

Guidance

Bed Bath & Beyond anticipates first-quarter adjusted earnings between 7 cents and 12 cents. For fiscal 2019, the company projects adjusted earnings of $2.11 to $2.20 per share.

"In fiscal 2019, we are modeling our operating profit, even including the investments in initiatives, to stabilize, and earnings per share to grow slightly, and for both to accelerate thereafter, as the impact from many of our key initiatives grows and we take advantage of the significant operating leverage of our business," CEO Steven Temares said.

Management plans to open 15 new stores in fiscal 2019, while closing around 40 locations.

Disclosure: I do not hold any positions in the stocks mentioned.

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About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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