Bed Bath and Beyond (NASDAQ: BBBY) reported lower than expected 2106 second quarter results after the close yesterday. Despite this, shares were higher Thursday by 0.74%. Shares of the popular retailer have been hovering near lows of the year since May, and haven't found any way to attract new buyers to the stock. The earnings announcement Wednesday likely wont help matters going forward.
The company announced adjusted earnings of $1.11 per share, which was below the streets forecast of $1.16 per shares. Along with the earnings miss, the company announced that overall revenue fell 0.2% year over year, down to $2.99 billion. This also missed analysts' expectations of $3.05 billion. As is typical when a company misses, analysts were quick to cut price targets, and downgrade the stock. Credit Suisse cut their price target to $39 from $41 along with a few others.
Gross margins continue to be the problem for brick-and-mortar retailers as rival Amazon (NASDAQ: AMZN) continues to earn more and more market share. Bed Bath and Beyond will continue to have the same, gross margin issues because management focuses on comparable store sales as a driving metric.
Now its not all negative here. The company got a few positive comments from analysts saying that the company does have some strengths. Attractive valuation levels, good cash flow, and a solid financial position with limited debt levels are just a few of the positives that the street had to offer after seeing the most recent earnings reports. This may be part of the reason for the slight up day today.
While BBBY has an up hill battle against the elephant in the room (Amazon), its a battle that can be won. The company has taken steps to diversify its stores offerings without taking on additional retail risk, but investors continue to cite the weak stock performance, which is hard to ignore as the rest of the market seems to consistently hit new all time highs.