Retailers have been struggling over the past few years as online shopping has forced these companies to innovate whether they like it or not. Bed Bath & Beyond has been one of the few winners in this sector recently, with shares of the company increasing by around 71.5 percent in the first quarter of the year.
However, this might be the turning point for the company which saw its shares drop almost ten percent in after-hours trading today as the company missed its earnings estimates.
The company said that it earned $1.20 a share on revenue figures of $3.31 billion. Analysts instead were expecting slightly different figures, with earnings per share closer to the $1.1 mark and revenues of $3.33 billion. Overall, store sales slipped around 1.4 percent, although Bed Bath & Beyond raised its dividend to an impressive 6 percent as compensation.
Additionally, the company went on to say that it estimates it’s Q1 2019 financial results will see revenues of $2.6 billion and earnings between 7 to 12 cents per share, as opposed to Wall Street’s $2.69 billion revenue estimate and around 30 cents per share. The difference between expectations and reality has seen the company’s shares fall in response.
While Bed Bath & Beyond has done extremely well for a retail store chain, the reality behind its meteoric rise in price over the past three months has more to do with corporate politics than actual business success. Having struggled for a long time under the 16-year tenure of it’s CEO Steve Temares, the company saw its shares decline 3.7 percent annually on average. However, activist investors have chosen to get involved in the company, which has helped Bed Bath & Beyond’s image in the financial press.
Seven analysts covering the company upgraded the firm after activist fund Legion Partners announced it had bought a 3.4 percent stake in the company in late March. Since the announcement, shares of Bed Bath & Beyond have increased 30 percent, while other indexes such as the Dow Jones are up only 3.4 percent in the same period.
Although markets are quite enthusiastic when activist investors get involved in a company, today’s financial metrics have soured the excitement. The fundamental problems surrounding Bed Bath & Beyond run deep, with constant corporate missteps taking its toll on the company at a time when retail stores have been struggling in the face of online shopping. If not for Legion’s investment into the company, Bed Bath & Beyond seemed like just another retailer that would likely go out of business in the years to come.
In response to the news, after-hours trading of Bed Bath & Beyond stock saw its price plunge around 9.7 percent.
Bed Bath & Beyond Company Profile
Bed Bath & Beyond is a home furnishings retailer, operating around 1,550 stores in all 50 states, Puerto Rico, Canada, and Mexico. Stores carry an assortment of branded bed and bath accessories, kitchen textiles, and cooking supplies.
In addition to 1,005 Bed Bath & Beyond stores, the firm operates 282 Cost Plus stores, 122 buybuy Baby stores, 82 Christmas Tree Shops andThat Stores (gifts/housewares), 57 Harmon Face Values stores (health/beauty care), linens/textile wholesaler Linen Holdings, and online retailers OneKingsLane, Personalizationmall and Ofakind. – Warrior Trading News
