Bed Bath & Beyond Earnings: What To Expect?
Bed Bath & Beyond (NASDAQ:BBBY) is scheduled to announce its second quarter results on Wednesday, September 21. The company started the year on a weak note, with its revenue and earnings per share missing analyst estimates, due to increased technology-related expenses, higher compensation costs and reduced margins. The retailer reported flat revenue of $2.74 billion, as an increase in its net sales from new stores was offset by decrease in its comparable sales. The company posted earnings of $0.80 per share, which declined 14% year-over-over (y-o-y).
Developments in Second Quarter
Bed Bath & Beyond signed a long term agreement with Alliance Data Systems to develop a co-branded credit card in June 2016. This agreement will help the retailer identify potential new customers through Alliance Data’s analytical marketing experience using a multi-channel approach, leveraging some of Alliance Data’s proprietary in-store and online capabilities. Bed Bath & Beyond has been losing market share due to intense competition from e-commerce players, and attractive rewards could aid in engaging customers going forward.
Also in June, the company announced its purchase of home goods site One Kings Lane to grow its home furnishings business further. Bed Bath & Beyond acquired the online home furnishing retailer to increase its digital presence in the market. The purchase price of the deal was reported to be $30 million, a huge discount from a valuation of nearly $1 billion that One Kings Lane had secured when it raised more than $100 million from investors in early 2014.
Although the benefits from the partnership with Alliance Data and the acquisition of One Kings Lane may not be visible in the forthcoming earnings, we expect these initiatives to drive the company’s top line in subsequent quarters.
Future Expectations
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For full year 2016, Bed Bath and Beyond lowered its comparable guidance to 0%-1% from 1%-2% after the first quarter results. Reuters’ compiled analyst estimates forecast revenues of $3.05 billion and earnings of $1.17 per share in Q2.
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