Bed Bath & Beyond Continues To Struggle Mightily To Adapt To A New Landscape

Analysts Brian Nagel and David Bellinger believe softer in-store sales and the ongoing margin weakness pressured results. The analysts noted that brick-and-mortar comps were down in mid-single digits, worse than the low-single-digit drop over the past several quarters, even as digital comps rose more than 20 percent.

The analysts also noted gross margins contracted 90 basis points to 36.5 percent compared to the consensus estimate of 36.8 percent.

The company maintained its 2017 earnings per share guidance for a low-single digit to a 10 percent drop, premised on flat to slightly positive comps and a lesser rate of gross margin contraction compared to a 70-basis-point contraction in 2016.

Lowering Estimates

Reflecting expectations for continued comp softness through year-end and the weak first-quarter results, Oppenheimer reduced its 2017 earnings per share estimate from $4.35 to $4.18 and its 2018 estimate from $4.30 to $4.12, with both estimates below the consensus estimates.

Oppenheimer said it remains optimistic that the company will successfully tweak its model, so as to compete more effectively in an omni-channel world. Though the pace of investment has stepped up, the firm indicated that clear signals of success are rare.

At the time of writing, shares of Bed Bath & Beyond were down 11.23 percent at $29.95.

Oppenheimer rates Bed Bath & Beyond a Perform with no specified 12–18-month price target.