Bed Bath & Beyond (BBBY) likely to report weak earnings in Q3

Bed Bath & Beyond Inc. (NASDAQ: BBBY) is slated to report its third-quarter 2019 earnings results on Wednesday, January 8, after the market closes. The results will be hurt by costs and expenses related to the transformation initiatives while the home goods retailer expects the current investment plans to drive top-line performance in the second half.

The company has been struggling in achieving digital sales due to the lack of an optimal pricing strategy. Also, Bed Bath & Beyond will be impacted by the stiff competition that is going on in the retail sector. The company is likely to lower the prices of the merchandise for surviving in the industry and attracting the customers into its shore.

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The company’s management has been keen on lowering the costs by closing down the stores for creating a balance between the physical and digital presence. The retailer plans to close 60 stores in fiscal 2019 including 40 Bed Bath & Beyond stores and 20 concept stores.

As of August 31, 2019, the company had cash and cash equivalents of $983.85 million while the total debt stood at $3.86 billion. The company expects the holiday season to revive itself from the debt and competition crunch. Also, the company remains committed to making the required investments in its infrastructure to the progress of its ongoing business transformation.

Analysts expect the company’s earnings to dip by 88.90% to $0.02 per share and revenue will decline by 5.9% to $2.85 billion for the third quarter. The company has surprised investors by beating analysts’ expectations in all of the past four quarters. The majority of the analysts recommended a “hold” rating with an average price target of $14.46.

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For the second quarter, Bed Bath & Beyond slipped to a loss from a profit last year due to the inclusion of unfavorable impact from charges related to the first wave of transformation initiatives including severance costs and an inventory write-down. However, the earnings surpassed analysts’ estimates while sales fell short of the consensus.

For fiscal 2019, the company expects earnings in the range of $2.08-2.13 per share and sales to be around $11.4 billion. At the end of December, the home furnishing retailer has been busy in reshuffling its executive team as five senior members resigned their positions.

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