![]() ![]() Margins Continue To Shrink – Bed Bath & Beyond’s operating margin fell to 5.8%, down 360 basis points, in the second quarter. E-commerce accounts for more than 18% of houseware and home furnishings sales in the U.S., and that proportion is likely to grow. This could also mean that online sales are cannibalizing in-store sales. Although comparable sales from the company’s customer-facing digital channel continue to see strong growth in excess of 20%, comparable sales from its stores continue to decline in the mid-single-digit percentage range. In fact, the company’s stock has been witnessing a decline since early 2015 for the same reason, primarily due to its heavy reliance on physical store sales. In addition, the company expects net earnings per diluted share for the full-year to be around $3 compared to previous $4.Īmazon Effect – The company faces growing competition from the likes of Amazon, as the shift to online sales has hindered Bed Bath & Beyond’s top line growth, and we do not expect this trend to subside anytime soon. The company also expects comparable sales to decline compared to the slightly positive previous guidance. Accordingly, it expects net sales to be relatively flat, as it plans to spend on organizational changes and transformational initiatives going forward. Lower Fiscal 2017 Guidance – Bed Bath & Beyond revised its full-year guidance after the weaker-than-expected fiscal first half of 2017. Management noted that the second quarter was difficult primarily due to the unfavorable impact of restructuring charges related to the realignment of store management structure and costs associated with hurricanes Irma and Harvey. Also, the retailer posted diluted earnings of 67 cents per share, which declined 40% y-o-y. ![]() Weak Q2 Earnings – The company’s revenue declined 2% y-o-y, largely due to a 2.6% decrease in comparable sales. ![]() Below we underline certain key factors that likely contributed to this decline in the company’s stock price. In addition, the stock is also down close to 50% year-over-year (y-o-y). In fact, post-Q2 earnings, the retailer’s stock reached a 52-week low of $22.10 per share, and the company’s stock is now trading at 45% lower than its price at the beginning of the year. Bed Bath & Beyond (NASDAQ: BBBY) started the year on a weak note, as the company’s 2017 performance thus far has been mostly below its guidance and market expectations. ![]()
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