Categories Analysis, Earnings, Retail

Bed Bath & Beyond stock jumps on Q3 earnings beat, positive guidance

Shares of home decor retailer Bed Bath & Beyond (BBBY) surged Wednesday after its third-quarter earnings surpassed analysts’ forecast, despite a year-on-year decline. Market sentiment was also buoyed by the management’s positive outlook for fiscal 2019.

Net profit dropped to $24.4 million or $0.18 per share in the November quarter from $61.3 million or $0.44 per share in the same period last year but came in above analysts’ prediction. During the quarter, the company slashed its retail inventories by about 6%.

The bottom-line was negatively impacted by a further sharp increase in selling costs and operating expenses. For more than two years, margins have been consistently under pressure from higher expenses, especially those related to discount coupons and direct-to-customer shipping.

During the quarter, the bottom-line was negatively impacted by a sharp increase in selling costs and operating expenses

Net sales moved up 2.6% annually to $3.0 billion during the three-month period. However, the top line was a tad below expectations. Comparable store sales dropped 1.8% as a fall in store sales more than offset an increase in customer-facing digital channels. Analysts had forecast a slower decline in comp sales.

The company said it is ‘ahead of plan’ with regard to its longer-term financial goals. Indicating a marked improvement in bottom-line performance next year – compared to the current levels – the management expects fiscal 2019 earnings to be in line with the preceding year.

Brexit crisis could hurt UK retailers next year

During the quarter, the company repurchased about 527,000 shares of its common stock for $8 million. Also, the board of directors declared a quarterly dividend of $.16 per share, to be paid on April 16, 2019, to shareholders of record on March 15, 2019.

Shares of Bed Bath & Beyond, which lost 46% in the last twelve months, gained about 16% following the earnings report Wednesday. Last month, the stock had dropped to a five-year low.

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