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Bed Bath and Beyond Delivers Another Earnings Flop

Jon C. Ogg

Bed Bath & Beyond Inc. (BBBY) is out with its earnings report of $1.60 per share for its fourth quarter. The retail giant earned $1.68 per share a year ago, and estimates were $1.60 per share according to Thomson Reuters. Total revenue of approximately $3.203 billion represents a drop of 5.8% from net sales of approximately $3.401 billion a year earlier. Thomson Reuters had estimates of $3.22 billion. Same-store sales for the quarter increased by 1.7%.

Bed Bath & Beyond also said that it is targeting $0.92 to $0.96 per share for the coming quarter, which is short of the estimates of $1.02 per share and compares to $0.93 per share in the prior year's equivalent quarter.

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For the full year, Bed Bath & Beyond signaled that it is targeting earnings per share to grow by a mid-single digit percentage rate. The Thomson Reuters estimate of $5.27 would have been calling for growth of about 9.8%.

The company repurchased approximately $532 million of its common stock during this last quarter for close to 7.5 million shares. As of March 1, its remaining balance of the current share repurchase program was approximately $1.1 billion. Bed Bath & Beyond still pays no dividend.

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Shares closed up $0.15 at $67.91 on Wednesday, but the stock's initial reaction was down almost 4% at $65.20 in the after-hours session after the report. The stock's 52-week range is $62.12 to $80.82 and this was a $70 stock as recently as last Friday.

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What you are seeing here is that Bed Bath & Beyond is simply having yet another negative reaction to yet another earnings report. This had been a secular growth story, but that has come to an end. At about 13-times forward earnings, now Bed Bath & Beyond is trying to pass itself off as a value stock.

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