Bed Bath & Beyond
Prior to this, Bed Bath & Beyond's stock was mired in a bear market and the stock was considered a contender for bankruptcy due to its lack of traction in e-commerce sales and falling revenues in addition to the dour prospects for the retail sector. However, this situation turned around as the pandemic led to a massive increase in the sales of home goods, and the company managed an impressive turnaround by increasing e-commerce sales and cutting costs.
And, there was a social media-driven movement to target the shares of companies with high short interest which led to huge gains for stocks like Bed Bath & Beyond. Despite a vicious squeeze, it still has a 22% short float.
Inside the Numbers
In its fiscal Q3, Bed Bath & Beyond reported a loss of $0.25 per share which was much worse than expectations of a break-even quarter. Revenue also missed at $1.88 billion vs. $1.95 billion which was a 28% drop in sales. Some of the decline was due to its 170 store closures with another 30 expected to close in 2022. Same-store sales dropped by 7%, while analysts were looking for a 1% decline.
The company attributed about $100 million in losses due to supply chain pressures which led to lower than normal inventories. Due to this, it was unable to take advantage of strong demand in stores and online during the holiday season.
The company also lowered its outlook due to supply chain headwinds. It's expecting a loss between breakeven and $0.15 per share for the full year and sales of $7.9 billion. This is a major cut from its previous guidance of a full year profit between $0.70 and $1.10 per share on revenue between $8.1 billion and $8.3 billion. Analysts were expecting a profit of $0.78 per share and revenue of $8.1 billion.
These results are creating another bearish narrative around Bed Bath & Beyond - that its gains last year were simply due to the short squeeze and its improvement in earnings was an aberration. Another issue for Bed Bath & Beyond and all retailers is that a huge onslaught of inventory is slated to hit stores in Q2-Q3 which will likely lead to major discounts and deals for consumers as stores will have to unload inventory and compete with each other as prices are slashed.