Why Bed Bath & Beyond Inc. Shares Sank

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 specialty retailer Bed Bath & Beyond (NASDAQ: BBBY  ) plunged 13% today after its quarterly results and outlook disappointed Wall Street.

So what: The stock has been sluggish in recent months on concerns over slowing growth, and today's third quarter results -- profit edged up 2% on a revenue increase of just 6% -- coupled with downbeat guidance only reinforce those worries. In fact, same-store sales rose just 1.3% versus 1.7% in the year-ago period, suggesting the company's competitive position is weakening a bit.

Now what: Management now sees full-year EPS of $4.79-$4.86, down from its view of $4.88-$5.01, and below the Wall Street consensus of $5.02. "We believe that throughout the United States and Canada, there is an opportunity to operate in excess of 1,300 Bed Bath & Beyond stores, as well as grow our World Market, Christmas Tree Shops or andThat!, and buybuy BABY concepts from coast to coast," Co-Founder/Co-Chairman Leonard Feinstein reassured analysts in a conference call. "We remain committed to and are excited about the continued growth of all our merchandise categories."

More important, with the stock now off about 15% from its 52-week highs and trading at a cheapish forward P/E of 12, now might be an opportune time to buy into that bullishness. 

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  • Report this Comment On January 09, 2014, at 3:36 PM, GEC135 wrote:

    Their is insufficient timely data to claim BBBY is loosing market share. BBBY’s has two main competitors, WSM and RH. Including BBBY’s Qtr disclosure today BBBY leads on all measures of performance (ROA, ROE, ROI), has no debt; has greater Profit Margin, Operating Profit Margin, Net Profit Margin, Cash Flow Margin and Cash Flow per Share. It leads with PE, P/Forecast E, P/S, P/CF. And while RH grew at 24.5% that is on $1.2B of sales = +$0.29B; BBBY grew 14.9% on $10.9B of sales = +$1.6B. (WSM grew significantly less than either.)

    This is a great opportunistic buy.

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Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

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9/2/2015 3:59 PM
BBBY $62.00 Up +1.14 +1.87%
Bed Bath & Beyond CAPS Rating: ***