Does This $371 Million Loss Mark the Bottom for Bed Bath & Beyond?

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Bed Bath & Beyond Inc. (NASDAQ: BBBY) might be a big deal to entrepreneurs trying to sell their new goods if they are making a pitch for an investment on Shark Tank. That said, this retailer doesn’t mean very much to the investing community any longer. Despite activist pressure and despite years of decline, Bed Bath & Beyond posted a significant loss in its latest quarter.

The retailer for home goods was impacted by impairment and severance charges, as well as costs associated with shareholder activities. Its net loss of $371.1 million translated to -$2.91 per share. That down from a profit of $43.6 million, or $0.32 per share, a year ago. The charges this quarter were $3.03 per share.

Backing out extraordinary items, Bed Bath & Beyond’s adjusted earnings came to $0.12 per share. That’s awful on the surface, but the consensus estimate from Refinitiv (Thomson Reuters) was only calling for earnings of $0.08 per share.

Bed Bath & Beyond continues to have revenue troubles. Its net revenues fell by 6.6% to $2.57 billion in the last quarter. That is about in-line with expectations, but its comparable-store sales falling by 6.6% was about 1 point worse than expected.

Even after the company backed out the charges and one-time items, Bed Bath & Beyond is seeing that earnings per share and total revenues are likely to be at the lower-end of prior expectations. That was previously put at $2.11 to $2.20 in earnings per share with revenues in a range of $11.4 billion to $11.7 billion.

The company ended the first quarter of 2019 with approximately $923 million in cash and investments, up about 9.0% from a year ago. It also spent approximately $81.5 million to repurchase shares of its common stock for roughly 5.3 million shares.

Bed Bath & Beyond shareholders still are not seeing that elusive turnaround come to fruition. That said, some investors may be hoping that things can finally start to improve ahead. Will value investors trust that less than 6 times expected earnings is a fair price? Or will investors just say that long-term earnings power is weak and that low valuation is masked because earnings might be heading even lower over time? And what if all the great efforts are made just in time for that elusive recession?

After closing up 0.7% at $11.52 ahead of earnings, Bed Bath & Beyond’s shares were trading up about 3% at $11.85 in the after-hours. Its 52-week range is $10.46 to $20.49 and the Refinitiv consensus analyst target price was $17.43.

Mary A. Winston, Interim CEO, said:

Bed Bath & Beyond is an iconic brand with tremendous opportunity and we recognize that there needs to be a fundamental change in our approach to executing the Company’s business transformation. We have set four key near-term priorities that include stabilizing and driving top-line growth; resetting the cost structure; reviewing and optimizing the Company’s asset base, including our portfolio of retail banners; and refining our organization structure… we are committed to completing a deep review of the business to prioritize and drive forward the most meaningful initiatives to improve performance. As we execute against these near-term priorities, our focus will remain on delighting our customers and delivering long-term value for our shareholders.

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