Key Takeaways From Bed Bath & Beyond’s Q1 Earnings

Bed Bath & Beyond (NASDAQ:BBBY) reported weak fiscal first quarter results on Thursday, June 22, as both its revenues and earnings fell short of consensus estimates. The company’s stock tanked in after hours trading.

Key takeaways from the Q1 results are below:

• In the first quarter, the company’s revenue remained flat at $2.74 billion, which fell short of consensus estimates by $50 million, primarily due to an increase of 2.1% in non-comparable sales including PMall, One Kings Lane and new stores, largely offset by a 2% decrease in comparable sales.
• This decline in comparable sales reflected a decrease in the number of transaction in stores, partially offset by an increase in the average transaction amount.
• Comparable sales from the company’s customer facing digital channel continued to have strong growth in excess of 20%, while comparable sales from its stores declined in the mid single-digit percentage range.
• On the cost side, Bed Bath & Beyond’s selling, general and administrative (SG&A) expenses increased 5% year-over-year (y-o-y) to around $853 million due to payroll and payroll-related items, including wage increases, further investments in technology including related depreciation, and advertising expenses.
• Bed Bath & Beyond’s gross margins continued to face pressure in the quarter. The company’s gross margin declined by approximately 90 basis points (bps) from 37.4% in Q1 2016 to 36.5% in Q1 2017. The company identified an increase in net direct-to-customer shipping expenses as the primary reason behind this decline, which resulted from more promotional shipping activity. This was due to the retailer’s free shipping thresholds of $29 for this quarter, which was at $49 for about half of the first quarter last year.
• In terms of capital expenditures, the company spent $81 million in this quarter, of which more than 40% was spent on technology projects including investments in digital capabilities and the development and deployment of new systems and equipment in the stores.
• Bed Bath & Beyond also posted diluted earnings of 53 cents per share, which declined 34% y-o-y, and missed consensus estimates by 13 cents.
• The company did not publish guidance for the current quarter, but consensus estimates for the company’s fiscal second quarter call for earnings of $1.02 per share and revenues of $3 billion, implying growth of about 2% and (8)%, respectively.

Have more questions about Bed Bath And Beyond? Please refer to our complete analysis for Bed Bath & Beyond  

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