Bed Bath & Beyond Cuts FY21 Outlook As Q2 Results Miss Estimates

Home improvement retailer Bed Bath & Beyond, Inc. (BBBY) reported on Thursday a net loss for second quarter compared to a profit last year, hurt by charges related to its restructuring and transformation initiatives.

Both adjusted earnings per share and net sales missed analysts’ expectations. The company also slashed its financial guidance for the full-year 2021, based on its year-to-date performance and current expectations.

The company’s stock is plummeting 24 percent in pre-market trading following the announcement of the results.

For the second quarter, the New Jersey-based home goods retailer reported a net loss of $73.22 million or $0.72 per share, compared to net income of $217.90 million or $1.75 per share in the prior-year quarter.

Results for the latest quarter include charges such as non-cash impairments related to certain store-level assets and tradenames, loss on sale of businesses, loss on the extinguishment of debt, charges recorded in connection with the Company’s restructuring and transformation initiatives, and the income tax impact of these items.

Excluding items, adjusted net income for the quarter were $3.70 million or $0.04 per share, compared to $62.25 million or $0.50 per share in the year-ago quarter.

On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.52 per share for the quarter. Analysts’ estimates typically exclude special items.

Net sales for the quarter declined 26 percent to $1.99 billion from $2.69 billion in the same quarter last year. Analysts expected revenues of $2.06 billion for the quarter.

The decline in sales was attributable to a core banner sales decline of 11 percent, primarily driven by a decrease in Bed Bath & Beyond banner sales. Net sales also included a planned reduction of 15 percent from non-core banner divestitures.

Comparable sales for the quarter declined 1 percent, fueled by slower than expected traffic trends in August across stores and digital and a 4 percent decline in comparable sales on core Bed Bath & Beyond banner.

Looking ahead to the third quarter, the company expects adjusted earnings in a range of flat to $0.05 per share on net sales between $1.96 billion and $2.0 billion, which only reflects sales from the Company’s Core businesses.

Net Sales also includes planned sales reductions from divestitures and the Company’s store fleet optimization program. On a Comparable Sales basis, the Company expects to be approximately flat compared to the prior year period.

Analysts expect earnings of $0.28 per share on net sales of $2.02 billion for the quarter.

For fiscal 2021, the company now projects adjusted earnings in a range of $0.70 to $1.10 per share on net sales between $8.1 billion and $8.3 billion, with comparable sales of flat to up slightly for the second through fourth quarters of fiscal 2021.

Previously, the company expected adjusted earnings in the range of $1.40 to $1.55 per share on net sales between $8.2 billion and $8.4 billion.

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