Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Bed Bath & Beyond Stock Tumbled Today

By Timothy Green - Sep 27, 2018 at 2:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Profits fell off a cliff at the struggling home goods retailer.

What happened

Shares of Bed Bath & Beyond ( BBBY 4.92% ) carved out a new 52-week low on Thursday after the retailer reported disappointing second-quarter results. A slump in comparable sales despite a strong consumer environment, a steep drop in earnings, and reduced full-year guidance sent the stock 22.5% lower by 12:15 p.m. EDT.

So what

Bed Bath & Beyond reported second-quarter revenue of $2.935 billion, flat compared to the second quarter of 2017 and about $20 million below the average analyst estimate. Comparable sales declined by 0.6%, with growth in online sales more than offset by a mid-single-digit sales decline in stores.

A declining chart.

Image source: Getty Images.

Earnings per share came in at $0.36, down from $0.67 in the prior-year period and $0.14 below what analysts were expecting. Gross margin dropped 2.7 percentage points year over year to 33.7%, while operating expenses edged up. Operating income tumbled by 53%.

Now what

Bed Bath & Beyond now expects its full-year comparable sales to be roughly flat compared to last year, a slight reduction from its previous outlook. The company also now sees its full-year earnings per share at roughly $2, the low end of its previous range.

Bed Bath & Beyond still expects to slow down the declines in operating profit and earnings per share through fiscal 2019 and to return to earnings-per-share growth by fiscal 2020. But with the stock now trading for around 7 times the company's new full-year earnings guidance, the market just doesn't buy it.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bed Bath & Beyond Inc. Stock Quote
Bed Bath & Beyond Inc.
$17.95 (4.92%) $0.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/02/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.