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Why Bed Bath & Beyond Stock Is Soaring Today

By Rich Duprey – Jan 6, 2022 at 11:41AM

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The market's reaction doesn't seem to line up with a rather ugly earnings report.

What happened

Shares of Bed Bath & Beyond (BBBY -26.23%) were soaring over 10% higher in morning trading Thursday despite the home goods retailer reporting fiscal 2021 third-quarter earnings that missed analyst expectations and had management warning it would report a loss for the full year.

The stock had actually plunged by a like amount in pre-market trading. But once the stock market opened, it was off to the races for Bed Bath & Beyond as the report indicated consumers responded well to its mitigation efforts following a slower-than-expected start to the quarter.

Couple looking at kitchenwares

Image source: Getty Images.

So what

Bed Bath & Beyond reported revenue of almost $1.88 billion, far lower than the $2.61 billion it recorded last year, and broadly missed the $1.97 billion analysts had been looking for. Net losses also dramatically widened to $276 million, or $2.78 per share, from the loss of $75 million, or $0.61 per share, it reported a year ago.

Even on an adjusted basis, Bed Bath & Beyond wildly missed the mark with a $0.25 per share loss, when analysts were forecasting it would post a profit of $0.01 per share.

Now what

So why the disconnect between performance and the stock? Well, the home goods retailer had fallen 11% yesterday ahead of the earnings report, but Bed Bath & Beyond says it had its largest quarter ever for customer acquisition in its loyalty program, Beyond+, growing by nearly 500,000 members.

The problems it experienced also weren't of the company's making as the global supply chain disruptions and runaway inflation caused a lack of inventory in its stores. Even so, as the retailer got off to a slower-than-expected start in September and October, it quickly put in motion a number of initiatives to counteract the decline that helped soften the blow.

A sharp decline in comparable-store sales in the first two months of the quarter eased up considerably in November, though not nearly enough to turn positive, let alone offset the declines Bed Bath & Beyond previously experienced.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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