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Why Bed Bath & Beyond Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of home furnishings retailer Bed Bath & Beyond (Nasdaq: BBBY  ) plummeted 15% on Thursday after its current-quarter outlook missed Wall Street expectations.

So what: Bed Bath & Beyond posted particularly solid first-quarter results -- EPS of $0.89 versus $0.72 a year ago -- but a disappointing outlook for the second quarter is triggering concerns over profitability going forward. Management is being forced to spend on its online business much sooner than expected in the face of increasing pressure from giant (Nasdaq: AMZN  ) , reinforcing worries about the competitive headwinds working against Bed Bath & Beyond.

Now what: The company now expects second-quarter EPS of $0.97 to $1.03 on revenue of $2.22 billion, versus Wall Street's view of $1.08 and $2.24 billion, respectively. "As always, we will continue to invest in all aspects of our company and work to enhance our customer's overall experience in store, online and through mobile devices and social media," said CEO Steven Temares in a conference call.

With the stock now off about 20% from its 52-week high and trading at a forward P/E of 11, betting on those initiatives might not be a bad idea.

Interested in more info on Bed Bath & Beyond? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Bed Bath & Beyond. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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