Why Bed Bath & Beyond Was Slammed Despite Topping Estimates

Bed Bath & Beyond Inc. (NASDAQ: BBBY) reported its most recent quarterly results before the markets opened on Wednesday. This a stock previously targeted by Reddit’s WallStreetBets because of its sizable short position, but today it seems the short sellers are winning.

The firm said that it had $0.40 in earnings per share (EPS) on $2.6 billion in revenue, which compares with consensus estimates of $0.31 in EPS and $2.63 billion in revenue. The fourth quarter of last year reportedly had EPS of $0.38 and revenue of $3.11 billion.

Comparable sales increased for the third consecutive quarter, with total enterprise comparable sales growth of 4%, led by strong digital growth of roughly 86%. However, comparable store sales decreased 20% in the quarter.

Net sales decreased 16% compared year over year, driven by impacts from previously planned banner divestitures and permanent store closures. Excluding these impacts of about 12%, core banner net sales decreased roughly 3%, primarily due to store closing activity. Total store net sales decreased 27%, but this was somewhat offset by massive digital sales.

Looking ahead to the fiscal 2021 full year, the company expects to see sales in the range of $8.0 billion to $8.2 billion and adjusted EBITDA between $500 million and $525 million. Consensus estimates are calling for $1.31 in EPS on $8.18 billion in revenue for the full year.

On the books, Bed Bath & Beyond’s cash, cash equivalents and restricted cash came in at $1.4 billion, an increase of $384 million from last year. Note that the company has total liquidity of $2.1 billion, including the firm’s revolving credit facility.

Bed Bath & Beyond stock traded down over 14% to $24.01 Wednesday morning. That was in a 52-week range of $4.32 to $53.90. The consensus price target is $27.96.