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Bed Bath Beyond Inc. BBBY is set to report first-quarter fiscal 2020 earnings on Jul 8, after the closing bell. The earnings results, no doubt, will reflect the impact of the coronavirus pandemic. After all, the reporting period corresponds to the months of March, April and May, when social-distancing measures were in place.
Lockdown measures compelled the specialty retailer to temporarily shut down a majority of its stores throughout the quarter, which may have affected the top-line number. In fact, nearly all of its 1,500 stores were closed during the months of April and May, with the exception of the Buy Buy Baby and Harmon Face Values stores.
Still, it’s not all discouraging. With a greater number of people staying at home amid rising COVID-19 cases in many parts of the country, demand for home furnishing products has jumped considerably, which should stand in good stead for the home-focused retailer. At the same time, Bed Bath & Beyond successfully shifted some of its retail demand to its online channels. For instance, the company witnessed a surge in digital demand for things like bread machines, coffeemakers and air purifiers, to name a few.
But let’s admit, the business certainly dealt with immense sales pressure from closures in wake of the pandemic. And such store closures eventually led to a cash crunch. After all, even though the stores are non-operational, the company had to bear some fixed costs associated with the stores. Moreover, the company’s initiative to shift toward digital selling during the quarter bumped up costs, impacting profit margins. Last but not the least, in the said quarter, the company had to bear inventory write-down charges for products that remained unsold over the spring months.
Analysts, thus, call for total revenues of $1.32 billion in the fiscal first quarter, suggesting a decline of 48.9% year over year. Additionally, the company’s fiscal first-quarter loss is pegged at $1.40, whereas it reported earnings of 12 cents in the year-ago quarter.
What’s more, the Zacks Rank #3 (Hold) company has an Earnings ESP of -42.35%. Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bed Bath Beyond Inc. Price and EPS Surprise
Bed Bath Beyond Inc. price-eps-surprise | Bed Bath Beyond Inc. Quote
Discouraging earnings performance, without a doubt, leads to a decline in share price. The company’s earnings for the current year are expected to decline more than 100%. In fact, shares of Bed Bath & Beyond have declined 40.8% year to date. And this is because the company was struggling with dismal sales trends and frequent management changes before COVID-19.
However, the company’s plans to open all stores in recent times, expand contactless delivery option, transform business, reset cost structure, optimize asset base and refine the organization base bode well. Maybe that explains why keeping an eye on the company won’t be a bad proposition at the moment despite the dimmed chances of an earnings beat.
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