Bed Bath & Beyond Strong Earnings Beat Held Back by Weak Guidance

Chris Lange

When Bed Bath & Beyond Inc. (NASDAQ: BBBY) reported its fiscal fourth-quarter financial results after the markets closed on Wednesday, the company said that it had $1.84 in earnings per share (EPS) and $3.53 billion in revenue. Consensus estimates from Thomson Reuters had called for $1.77 in EPS and revenue of $3.5 billion. In the same period of last year, the retailer posted EPS of $1.91 and $3.42 billion in revenue.

Comparable sales in the quarter increased by roughly 0.4%, compared with a gain of approximately 1.7% in last year’s fiscal fourth quarter. At the same time, comparable sales from customer-facing digital channels grew in excess of 20%, while last year it declined in the low single-digit percentage range during the fiscal 2016 fourth quarter.

In terms of guidance (mentioned in the conference call), the company projects that net sales for fiscal 2017 will increase in the low- to mid-single digits, while comparable sales are expected to be flat to up slightly, with strong comparable growth in the customer-facing digital sales channels. Also EPS are expected to decline in the range of low single digits to 10%.

The consensus estimates for the coming fiscal full year are $4.67 in EPS and $12.61 billion in revenue.

During the fiscal 2016 fourth quarter, the company repurchased roughly $171 million of its common stock under its existing $2.5 billion share repurchase program. At the end of the quarter, roughly $1.7 billion remained in the authorization.

On the books, Bed Bath & Beyond cash, cash equivalents and short-term investments totaled $488.33 million at the end of the quarter, down from $601.8 million in the same period from last year.

CEO Steven H. Temares commented:

During fiscal 2016, we made significant investments to evolve our Company and advance our mission to be trusted by our customers as the expert for the home and ‘heart-related’ life events by continuing to build and deliver a strong foundation of differentiated products, and services and solutions for customers, while driving operational excellence.

Shares of Bed Bath & Beyond closed Wednesday down 3% at $37.80, with a consensus analyst price target of $41.63 and a 52-week trading range of $37.28 to $52.33. The stock was up 3.2% at $39.00 in early trading indications Thursday.