As The Holidays Approach, Comps At Bed Bath & Beyond Remain Challenged

Barclays’ Matthew McClintock noted that Q2 2016 marked the first time that Bed Bath & Beyond Inc. BBBY has reported “sequential quarters of comp decline since the Great Recession.”

McClintock maintained an Equal Weight rating on the company, with a price target of $45.

Comp Decline

“With a sequential comp decline and ongoing margin pressures, we remain on the sidelines despite several items highlighted by management as having potential to drive improved performance in 2H16,” the analyst mentioned.

Related Link: Bed Bath And Beyond Misses Q2 Estimates, Comps Down 1.2%

Management reaffirmed its full year guidance, citing easy compares in Q3 2016, as compared to Q3 2015, two extra days of holiday shopping, as well as marketing initiatives such as Bed Bath & Beyond’s Welcome Home catalog.

However, according to the Barclays report, “Regardless of any potential reacceleration in the back half of the year, the long-term trend of comps remains downward sloping despite a wide range of merchandising initiatives, digital investments, and marketing campaigns, leading us to question if/when the downward trend can stabilize/reverse.”

Q2 Results

The company reported its Q2 2016 EPS at $1.11, below the estimate, while revenue fell 0.2 percent to $2.99 billion, again missing the estimate.

Comps declined 1.2 percent, with in-store comps declining and digital comps rising more than 20 percent.

“A decrease in the number of transactions was partially offset by an increase in average transaction amount,” McClintock stated, while adding, “Without a rebound in traffic trends, we are skeptical of the company's ability to hit its comp guidance of 0-1 percent in FY16.”

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