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Bed Bath & Beyond's Earnings Beat Projections

Bed Bath & Beyond Inc. (NASDAQ:BBBY) released its second-quarter earnings after the market closed on Oct. 2. The New Jersey-based home goods retailer edged past Wall Street's earnings estimates, while revenue fell short of expectations.

By the numbers

Bed Bath posted earnings of 34 cents per share on $2.72 billion in revenue. Analysts were anticipating earnings of 27 cents per share on $2.75 billion in revenue.


The gross profit of $920.7 million reflected a decline of roughly 6.9%. In contrast, the gross profit margin surged 20 basis points to 33%.

At the end of the quarter, the company had approximately $983.9 million in combined cash and investments.

"We feel good about the progress we are making against our four key near-term priorities, including stabilizing sales and driving top line growth, resetting the cost structure, reviewing and optimizing the company's asset base, including the portfolio of retail banners, and refining our organization structure," Interim CEO Mary Winston said.

Falling comps

Comparable store sales declined 6.7% in the reported quarter, which was more than the 5.44% decrease analysts were anticipating, on the back of fewer store transactions. It marked the tenth successive quarter of comps decline for the company.

Store closures

By the end of fiscal 2019, the company will have closed 60 stores, which is more than what it had previously estimated (40 stores). A majority of the stores are expected to close after the holiday shopping season ends in early 2020.

"With this action we are increasing the profitability of our remaining portfolio, and believe that our remaining fleet will benefit from our renewed focus on driving traffic and operating efficiency," Winston said.

Financial guidance

The retailer also provided full fiscal 2019 guidance. Bed Bath & Beyond expects its consolidated net sales to be around $11.4 billion. The company projects diluted earnings per share in the range of $2.08 and to $2.13.

Capital spending is estimated to be between $350 million and $375 million.

Disclosures: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.