Bed Bath & Beyond’s Challenges To Continue Into Fiscal 2019 As Well

April 11th, 2019 by Trefis Team
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BBBY: Bed Bath & Beyond logo
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Bed Bath & Beyond

Bed Bath & Beyond (NASDAQ: BBBY) reported mixed Q4 results on April 10. This was largely due to mixed holiday-season sales, with revenue declining at its physical stores and rising only modestly in the online channel. For full-year 2018, Bed Bath & Beyond’s revenue declined 3% year-over-year (y-o-y) to $12 billion, as a 1.1% decrease in comparable sales was partially offset by an increase in non-comparable sales, including One Kings Lane, PMall, and new stores. The net sales were also impacted by one less week in the year compared to fiscal 2017. The retailer’s comparable store sales declined in the mid-single-digit percentage range.

We have created an interactive dashboard on How Did Bed Bath & Beyond Fare In 2018, And What Can We Expect In Fiscal 2019?, which outlines our forecasts for the company. You can change the expected revenue, operating margins and net margin figures for the company to gauge how it will impact its earnings in 2019. In addition, you can also see more Trefis Consumer Discretionary company data here.

Detailing Fiscal 2019 Forecast

  • Revenues:  Bed Bath & Beyond expects its net sales to range between $11.4 billion and $11.7 billion, driven by the continued declines in in-store traffic as well as actions being taken in support of prioritizing profitability over near term sales growth.
    • Comparable Sales are expected to decrease in the low- to mid-single-digit percentage range, due to low same-store sales, partially offset by anticipated growth in digital channels as well as optimization of its coupon strategy.
  • Gross Margin:
    • BBBY’s gross margins declined from 37.5% in 2016 to 34.1% in 2018, due to the increase in net direct-to-customer shipping expenses as the primary reason – which resulted from more promotional shipping activity.
    • We expect the company’s gross margins to slightly increase to 34.5% in fiscal 2019. Our forecast is based on company’s initiatives which include driving sales to higher-margin categories, including private label and proprietary brands.
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  • Expenses :
    • BBBY’s total expenses have grown from $11 billion in 2016 to $12.1 billion in 2018.
    • We expect the company’s expenses to decline y-o-y in 2019, due to a decrease in Selling, General and Administrative (SG&A) costs
    • The company expects to offset external wage pressures by improving store productivity in 2019.
  • EPS:
    • BBBY earlier stated that it planned to moderate operating profit declines and grow net earnings per diluted share by fiscal 2020. It also expected its fiscal 2019 net earnings per diluted share to be about the same as fiscal 2018. However, the company guided for strong EPS of $2.11 to $2.20 along with the Q4 earnings report, compared to a consensus estimate mark of $1.82 for 2019.

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