Bed Bath and Beyond stock sinks to 5-year low

Bed Bath and Beyond (BBBY) stock plunged to a new five-year low of $10.46 on Monday as investors were concerned on the company’s e-commerce expansion and holiday season sale. The Home décor retailer has scheduled its third-quarter results in the second week of January.

Investors are likely to look out for the company’s holiday season sales numbers and its step towards profitability. However, the holiday season sales would be included in the fourth quarter results. Traders expect the company to report moderate declines in the bottom line for fiscal 2018 and 2019, in line with the retailer’s expectations.

Retail stocks have inched higher in the final shopping day before Christmas despite a triple-digit plunge for the Dow Jones Industrial Average. Majority of the retailers offer free last-minute buy-online-pickup-in-store service on Christmas Eve. But, shares of Bed Bath and Beyond fell to a five-year low.

Analysts, on average, expect Bed Bath and Beyond to post earnings of $0.18 per share on revenue of $3.04 billion for the third quarter. In comparison, during the previous year quarter, the company reported a profit of $0.44 per share on revenue of $2.95 billion. Majority of the analysts have recommended a “hold” rating on the stock.

Retail sector may be heading to a dry holiday season

The company is expected to be benefited by the higher sales from the customer-facing digital channels for the third quarter. However, an increase in expenses and cost-driven margin pressure are likely to dent into the profits.

Similar to peers, Bed Bath and Beyond are inching slowly in the e-commerce space and retaining its store footfall for regaining the past glory. The recovery is depended on the favorable inventory position, economic growth, and tax reform benefits. The company should increase the demand for the products in order to lower its costs.

Traders expect the holiday season to provide satisfactory returns as the company had begun turnaround efforts in the second quarter and it remains a cash cow with solid cash flows. Investors project the company’s functional turnaround plan and conservative valuation to provide favorable upside.

Shares of Bed Bath and Beyond ended Monday’s session down 1.76% at $10.62. The stock has fallen over 86% in the past five years and over 43% in the past three months.

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