Bed Bath & Beyond (BBBY) Second Quarter Profits: What To Expect

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VSDoes a Bed Bath & Beyond (BBBY) replicate the kind of success the market has seen in other physical retailers such as Walmart (WMT), Target (TGT) and Costco (COST)?

The home retailer is expected to release its results for the second quarter of fiscal 2021 before Thursday’s opening bell. Traditional retailers such as Target and Walmart, as evidenced by their strong results, have shown they can leverage their size and run to withstand the adverse effects of the pandemic. Bed Bath & Beyond will want to show that it also belongs to this esteemed group. Investors will also want to know if the business can move beyond the theme of the stock itself.

While the stock price has risen 32% year-to-date, the stock has fallen 22% in the past six months, behind the S&P 500 index’s 13.77% rise It looks like the gains have faded as the meme stock mania wears off. Now under new management, Bed Bath & Beyond has shown signs of accelerating transformation. First-quarter results released in June gave adjusted earnings of 5 cents per share, beating Street’s estimates.

Additionally, management raised the midpoint of full-year revenue guidance from $ 200 million to $ 8.3 billion and EBITDA to $ 530 million, while introducing an adjusted profit forecast to a midpoint of $ 1.50 per share. This demonstrated confidence in the company’s many initiatives, including the closing of the worst performing stores. The question is: can the business continue to show consistent profitability and move from a strictly physical to digital business? That said, the stock will react favorably with a beat on both lines and an upside forecast for the holiday quarter.

In the three months ending in August, the Union, New Jersey-based company is expected to earn 52 cents a share on $ 2.06 billion in revenue. This compares to the quarter last year, when profit was 50 cents a share on revenue of $ 2.69 billion. For the full year, ending in March, earnings of $ 1.52 per share would rise from a loss of 98 cents a year ago, while annual revenue of $ 8.31 billion would decrease by 10% year-on-year.

The growth of Bed Bath & Beyond’s e-commerce, which continues to improve in recent quarters, will also be an area of ​​focus. Already a survivor of the “death of Amazon (AMZN)”, the company is looking for ways to differentiate itself from its competitors. In the first quarter, although it missed earnings estimates, its investments in omnichannel offerings began to show that digital revenues not only grew 82% year-over-year, but accounted for both. third of first quarter revenue, which grew 73% year over year. year. Equally impressive, same-store sales growth jumped 86% year-over-year.

At the same time, the companies’ same-store sales were up 3% from the first quarter of 2019, in part due to a more than 20% increase in the company’s buybuy BABY banner, driven by growth of 50% of the digital channel. In other words, BBBY’s e-commerce efforts have started to produce solid returns. First quarter adjusted EBITDA improved to $ 86 million, driven by the expansion of adjusted gross margin, generating adjusted EPS of 5 cents per share.

All in all, Bed Bath & Beyond’s first quarter numbers were higher than expected. On Thursday, investors will want to see how much Bed Bath & Beyond can build on those numbers. The stock’s reaction will be more on the forecast for the holiday quarter than on the actual numbers themselves.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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