Why the Bed Bath & Beyond Turnaround Finally Has Come True

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Bed Bath & Beyond Inc. (NASDAQ: BBBY) reported its fiscal second-quarter financial results before the markets opened on Thursday. The specialty retailer said that it had $0.50 in earnings per share (EPS) and $2.72 billion in revenue. The consensus estimates had called for a net loss of $0.23 per share and revenue of $2.6 billion. The same period of last year reportedly had EPS of $0.34 on $2.72 billion in revenue.

During the most recent quarter, comparable sales increased about 6%. Note that this was the first comparable sales growth since the fourth quarter of fiscal 2016. Comparable sales for this quarter benefited from significantly strong growth in digital channels of about 89%, partially offset by a 12% decline in comparable store sales.

The comparable sales for the quarter increased despite net sales slipping 1% year over year. However, net sales from digital channels grew approximately 88%, while net sales from stores declined about 18%.

Management was quick to note that its growth strategy is unlocking improved financial performance and the marked improvement in the second quarter financial results reflects the potential of its digital-first, omni-always transformation and its efforts to build a modern, durable platform for success.

Since the coronavirus, management has taken direct action to stabilize the business, including reducing cost structure, enhancing financial flexibility and investing where it matters most to customers.

At the same time, Bed Bath & Beyond has assembled a world-class and experienced leadership team to rebuild its authority in Home and modernize operations to deliver a truly customer-inspired and omni-always shopping experience.

On the books, Bed Bath & Beyond cash, cash equivalents and short-term investments totaled $1.44 billion at the end of the quarter, up from $1.00 billion at the end of the previous fiscal year.

The company provided no guidance for the fiscal year or coming quarter. The consensus estimates are calling for a quarterly net loss of $0.42 per share and $2.65 billion in revenue, as well as a net loss of $2.35 per share and $9.61 billion in revenue for the fiscal year.

Bed Bath & Beyond stock traded up 25% early Thursday, at $18.70 in a 52-week range of $3.43 to $17.79. The consensus price target is $12.15.

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