Bed Bath & Beyond's Q4 Earnings Due Next Wednesday: Here's What To Expect

Bed Bath & Beyond Inc. (NASDAQ:BBBY) is scheduled to report its fiscal fourth-quarter 2016 results on April 5. The company could report its results broadly in-line with consensus expectations, and investors are likely to focus on comparable sales growth, profit margins and free cash flow, Loop Capital Partners’ Anthony Chukumba said in a report.

Chukumba reiterated a Sell rating and price target of $35 for Bed Bath & Beyond.

What To Expect

The analyst mentioned the following estimates for the company’s FQ4 results:

• Diluted EPS could be $0.01 ahead of consensus.
• Continued lackluster top-line growth.
• Flat comparable sales.
• Continued year-over-year gross margin contraction, estimated at down 50 bps, driven mainly by aggressive promotions.
• Continued selling, general, and administrative expense deleverage, with an estimated increase of 100 bps, excluding onetime items, “driven by top-line deleverage and increased omnichannel investments,” Chukumba wrote.

Investor Focus

“We expect investor focus to primarily be on BBBY's F4Q 2016 comparable sales growth and F2017 guidance, particularly given the continued deceleration in the company's top-line growth (including comp declines in four of the past five quarters). We also expect investors to focus on BBBY's profitability given the long strings of YoY gross margin declines and SG&A expense deleverage,” the analyst commented.

Chukumba further mentioned that investors may analyze the company’s FCF, which has plummeted significantly over the past few years, resulting in a curtailment of the company's ability to repurchase shares.

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