The last 12 months have been unfortunate for Bed Bath & Beyond (NASDAQ:BBBY). Shares have plummeted 37%. While this decline has been steady during this entire period, the negative sentiment toward the stock was magnified by the company's poor preliminary third-quarter results, which were released ahead of this weeks' earnings release. And Bed Bath & Beyond's Q3 release, which was posted on Thursday, didn't offer any items to reinvigorate investor interest.

Image source: Bed Bath & Beyond.

Bed Bath & Beyond results: The raw numbers


Q3 2015 Actuals

Q1 2014 Actuals

Growth (YOY)


$2.95 billion

$2.94 billion


Operating income

$293 million

$353 million


Adjusted EPS




What happened with Bed Bath & Beyond this quarter?
During Q3 -- a quarter that included Black Friday and the following day -- Bed Bath & Beyond's results were far worse than management was initially anticipating. When it reported second-quarter results, the company expected third-quarter sales to increase anywhere between 1.8% to 5% from the year-ago quarter. But with revenue only rising 0.3% from the year-ago quarter, actual results paled in comparison to these initial expectations for the quarter.

Earnings per share fared even worse, declining 11.4% compared to the year-ago quarter.

Comparable sales were also weaker than expected, decreasing 0.4%. This compares to management's initial expectations for comparable sales to increase 1% to 3% during the quarter.

What management had to say

  • Management attributed the weak quarter to "softer in-store transaction accounts," which management is careful to note reflects "the overall softness reported in the macro-retail environment during the quarter."
  • On a constant currency basis, sales were actually up 0.7% from the year-ago quarter -- still well behind Bed Bath & Beyond's initial guidance for sales to increase 1.8% to 5%.
  • Comparable sales from customer facing digital channels increased "in excess of 25%" during the quarter, the company said.
  • Management noted that gross profit margin continued to contract, decreasing 60 basis points from the year-ago quarter.
  • The company repurchased about $194 million of its common stock during the quarter, or about 3.3 million shares.
  • Management said it anticipates it will exhaust the remaining authorized cash from its $2 billion share repurchase program during the fourth quarter and then proceed to initiate repurchases from its September-approved $2.5 billion repurchase program.

Looking forward
Bed Bath & Beyond expects comparable sales to be "between relatively flat and an increase of approximately 2%, including an unfavorable foreign currency rate impact of approximately 30 basis points," management said during the company's third-quarter earnings call on Thursday. Net sales are expected to increase between 0.7% and 2.7%, and management anticipates Q4 EPS will be in the range of a 0.04% decrease to a 3.3% increase compared to the year-ago quarter.