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Category: Stock Market and Bed Bath & Beyond (BBBY)
Date: 9 July 2020 Stock Price of Bed Bath and Beyond : $10.41 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Bed Bath and Beyond, a struggling home furnishings firm.
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The impact of the COVID-19 situation was felt across our business during our fiscal first quarter, including loss of sales due to temporary store closures and margin pressure from the substantial channel shift to digital"
About Bed Bath and Beyond
Bed Bath & Beyond Inc. and subsidiaries is an omnichannel retailer selling a wide assortment of domestics merchandise and home furnishings which operates under the names Bed Bath & Beyond, Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, Harmon, Harmon Face Values, or Face Values, buybuy Baby and World Market, Cost Plus World Market or Cost Plus. Customers can purchase products either in-store, online, with a mobile device or through a customer contact center. The Company generally has the ability to have customer purchases picked up in-store or shipped direct to the customer from the Company’s distribution facilities, stores or vendors. In addition, the Company operates Of a Kind, an e-commerce website that features specially commissioned, limited edition items from emerging fashion and home designers; One Kings Lane, an authority in home décor and design, offering a unique collection of select home goods, designer and vintage items; PersonalizationMall.com, an industry-leading online retailer of personalized products; Chef Central, a retailer of kitchenware, cookware and homeware items catering to cooking and baking enthusiasts; and Decorist, an online interior design platform that provides personalized home design services. The Company also operates Linen Holdings, a provider of a variety of textile products, amenities and other goods to institutional customers in the hospitality, cruise line, healthcare and other industries. Additionally, the Company is a partner in a joint venture which operates retail stores in Mexico under the name Bed Bath & Beyond.
Overview of Bed Bath & Beyond's latest earnings report
- Net sales: $1.307 billion (down from $2.57 billion for the same quarter of the previous year)
- Net sales decreased by -49.1% over the last 12 months
- Cost of sales: $958.9 million (down from $1.685 billion for the same quarter of the previous year)
- Cost of sales decreased by -43.1% over the last 12 months
- Net loss: -$302.291 million (up from -$371.085 million for the same quarter of the previous year)
- Diluted loss per share: -$2.44 (up from -$2.91 per share for the same quarter of the previous year)
- Dividend per share: No dividend declared
- Diluted weighted-average shares outstanding: 123.697 million (up from 127.614 million for the same quarter of the previous year)
- Cash and cash equivalents: $1.120 billion
- Cash and cash equivalents per share: 9.05
- Cash and cash equivalents makes up 86.9% of Bed Bath and Beyond's market capital
- Cash and cash equivalents makes up 14.5% of Bed Bath and Beyond's total assets
- Inventories: $2.240 billion
- Inventories makes up 291% of Bed Bath and Beyond's total assets
- Stockholders equity of Bed Bath and Beyond: $1.461 billion
- Stockholders equity per share for Bed Bath and Beyond's : $11.81
- So Bed Bath and Beyond's is trading at 0.88 times it stockholders equity per share which is well outside the expected range of between 2 and 4 times most companies tend to trade at. Most firms tend to trade at a least 1 times its stockholders equity. Stockholders equity per share shows what each stockholder will get if the group were to sell all their assets, pay all liabilities and distribute the rest amongst stockholders.
- For some perspective the average price to book value of firms in the S&P 500 is 3.7
- Stockholders equity per share for Bed Bath and Beyond's : $11.81
- Cash used in operations $394.6 million
Bed Bath and Beyond's management commentary on the results
UNION, N.J., July 8, 2020 /PRNewswire/ -- Bed Bath & Beyond Inc. (Nasdaq: BBBY) today reported financial results for the first quarter of fiscal 2020 ended May 30, 2020.
Mark Tritton, Bed Bath & Beyond's President and CEO said, "The impact of the COVID-19 situation was felt across our business during our fiscal first quarter, including loss of sales due to temporary store closures and margin pressure from the substantial channel shift to digital. From the beginning of this crisis, we have taken measured, purposeful steps to help keep our people safe and our customers serviced, and we are proud of the way our teams have navigated this unprecedented challenge with speed and agility. At the same time, our actions to strengthen our financial position and liquidity are enhancing our flexibility and capacity to invest and rebuild our business for long-term success.
"With nearly all stores now open, we are delighted to welcome back our customers and drive an enhanced omni-always shopping experience. We are encouraged by early customer response, including continued strong demand, in excess of 80%, across our digital channels during the month of June, bolstered by the expansion of our Buy-Online-Pick-Up-In-Store (BOPIS) and Curbside Pickup services. We believe Bed Bath & Beyond will emerge from this crisis even stronger, given the strength of our brand, our people and our balance sheet," Tritton added.
Mark Tritton, Bed Bath & Beyond's President and CEO said, "The impact of the COVID-19 situation was felt across our business during our fiscal first quarter, including loss of sales due to temporary store closures and margin pressure from the substantial channel shift to digital. From the beginning of this crisis, we have taken measured, purposeful steps to help keep our people safe and our customers serviced, and we are proud of the way our teams have navigated this unprecedented challenge with speed and agility. At the same time, our actions to strengthen our financial position and liquidity are enhancing our flexibility and capacity to invest and rebuild our business for long-term success.
"With nearly all stores now open, we are delighted to welcome back our customers and drive an enhanced omni-always shopping experience. We are encouraged by early customer response, including continued strong demand, in excess of 80%, across our digital channels during the month of June, bolstered by the expansion of our Buy-Online-Pick-Up-In-Store (BOPIS) and Curbside Pickup services. We believe Bed Bath & Beyond will emerge from this crisis even stronger, given the strength of our brand, our people and our balance sheet," Tritton added.
Financial Position Update
An important focus of the Company during the fiscal 2020 first quarter was to increase liquidity and optimize costs. The Company had a fiscal 2019 year-end cash and investments balance of approximately $1.4 billion, and through well-controlled cash management strategies and other cost reduction interventions, ended the first quarter with approximately $1.2 billion in cash and investments. Subsequent to the end of the fiscal 2020 first quarter, on June 22, 2020, the Company announced a new $850 million three-year secured asset-based revolving credit facility (ABL Facility), which provides substantial additional liquidity if needed. The ABL Facility expires in June 2023 and replaces the Company's unsecured revolving credit facility (Revolver) that allowed for borrowings up to $250 million. In connection with entering into the ABL Facility, the Company refinanced the outstanding balance on the Revolver with proceeds of $236 million borrowed under the ABL Facility.
Outlook
The Company is not providing financial guidance for 2020 due to the continued uncertainty related to the impact of the COVID-19 pandemic. The COVID-19 pandemic remains volatile and the impact continues to evolve, and it could adversely affect the Company's store re-opening plans and other measures intended to address its impact and/or the current expectations of its future business performance.
During the fiscal 2020 first quarter, the Company took decisive action to proactively manage the unprecedented financial and operational impacts of COVID-19, while prioritizing the investments designed to rebuild and grow the business. In prioritizing investments such as the accelerated launch of BOPIS and Curbside Pickup services, the Company rapidly evolved to meet the changing needs of its customers during this time. The Company is taking measured steps to re-open stores to the public, including the launch of its Store Safety Plan to help ensure customers can shop confidently. The Company believes it has a strong financial position to manage through these uncertain times.
In addition, as part of the extensive business transformation underway, the Company continues to drive strong actions as part of its ongoing restructuring program. These include, among other things, efforts to reduce cost of goods and drive supply chain transformation to address gross margin pressures related to the substantial shift of sales to digital channels. Furthermore, the Company plans to right-size its real estate portfolio by closing approximately 200 mostly Bed Bath & Beyond stores over the next two years and focus on other SG&A expense reductions.
The Company expects the aggregate benefit from these actions will generate future annualized savings of between $250 and $350 million, excluding related one-time costs.
An important focus of the Company during the fiscal 2020 first quarter was to increase liquidity and optimize costs. The Company had a fiscal 2019 year-end cash and investments balance of approximately $1.4 billion, and through well-controlled cash management strategies and other cost reduction interventions, ended the first quarter with approximately $1.2 billion in cash and investments. Subsequent to the end of the fiscal 2020 first quarter, on June 22, 2020, the Company announced a new $850 million three-year secured asset-based revolving credit facility (ABL Facility), which provides substantial additional liquidity if needed. The ABL Facility expires in June 2023 and replaces the Company's unsecured revolving credit facility (Revolver) that allowed for borrowings up to $250 million. In connection with entering into the ABL Facility, the Company refinanced the outstanding balance on the Revolver with proceeds of $236 million borrowed under the ABL Facility.
Outlook
The Company is not providing financial guidance for 2020 due to the continued uncertainty related to the impact of the COVID-19 pandemic. The COVID-19 pandemic remains volatile and the impact continues to evolve, and it could adversely affect the Company's store re-opening plans and other measures intended to address its impact and/or the current expectations of its future business performance.
During the fiscal 2020 first quarter, the Company took decisive action to proactively manage the unprecedented financial and operational impacts of COVID-19, while prioritizing the investments designed to rebuild and grow the business. In prioritizing investments such as the accelerated launch of BOPIS and Curbside Pickup services, the Company rapidly evolved to meet the changing needs of its customers during this time. The Company is taking measured steps to re-open stores to the public, including the launch of its Store Safety Plan to help ensure customers can shop confidently. The Company believes it has a strong financial position to manage through these uncertain times.
In addition, as part of the extensive business transformation underway, the Company continues to drive strong actions as part of its ongoing restructuring program. These include, among other things, efforts to reduce cost of goods and drive supply chain transformation to address gross margin pressures related to the substantial shift of sales to digital channels. Furthermore, the Company plans to right-size its real estate portfolio by closing approximately 200 mostly Bed Bath & Beyond stores over the next two years and focus on other SG&A expense reductions.
The Company expects the aggregate benefit from these actions will generate future annualized savings of between $250 and $350 million, excluding related one-time costs.
Bed Bath & Beyond (NASDAQ: BBBY) stock price history
The image below, obtained from Google, shows the stock price history of Bed Bath & Beyond for the last 5 years. And it's been a torrid time for Bed Bath & Beyond stockholders. 5 years ago the stock was trading at around $67.90 a stock and its currently trading at $10.29 a stock. That's a very negative return of -84.6% lost by Bed Bath & Beyond over the last 5 years.
The stock of Bed Bath & Beyond is trading at a lot closer to its 52 week low of $3.43 than it is to its 52 week high of $17.79 which to us is a clear indication that the short term sentiment and momentum of Bed Bath & Beyond stock is very negative at this point in time.
The stock of Bed Bath & Beyond is trading at a lot closer to its 52 week low of $3.43 than it is to its 52 week high of $17.79 which to us is a clear indication that the short term sentiment and momentum of Bed Bath & Beyond stock is very negative at this point in time.
Bed Bath and Beyond (BBBY) stock vs Ethan Allen stock
The image below shows the stock price performance of Bed Bath and Beyond (BBBY) and Ethan Allen (ETH). Both companies are active in the interior decorating space. As the image above shows the stock price history of BBBY is pretty depressing, but they are not the only ones active in this space that is struggling. As the stock price comparison between BBBY and ETH show both these firms stocks have had a pretty dismal time over the last three years.
Over the last 3 years the stock of Bed Bath and Beyond declined by -63.05% while the stock of Ethan Allen (ETH) declined by -62.28%. So pretty horrible numbers for both these firms.
Over the last 3 years the stock of Bed Bath and Beyond declined by -63.05% while the stock of Ethan Allen (ETH) declined by -62.28%. So pretty horrible numbers for both these firms.
Recent coverage of Bed Bath and Beyond
The extract below shows some of the latest coverage on Bed Bath and Beyond obtained from CNBC
Bed Bath & Beyond said Wednesday its sales tumbled nearly 50% during its latest quarter, even as online sales surged more than 100% during April and May, with consumers stocking up on cleaning supplies and home decor.
The company said it plans to permanently close roughly 200 of its namesake stores over the next two years, starting later in 2020, as it works toward getting back to profitability against the backdrop of the coronavirus pandemic. As of May 30, it operated a total of 1,478 stores, including 955 Bed Bath & Beyond shops.
Its shares were falling nearly 7% in after-hours trading. Bed Bath — which also owns the chains Buybuy Baby, Christmas Tree Shops and Harmon Face Values — said these actions should generate annual cost savings of between $250 million and $350 million, excluding related one-time costs. “We saw there were a number of stores dragging us down,” Chief Executive Mark Tritton told CNBC in a phone interview. “We will continue to look at the rest of our concept doors, now that we have established the data criteria.”
Read the full article here
Bed Bath & Beyond said Wednesday its sales tumbled nearly 50% during its latest quarter, even as online sales surged more than 100% during April and May, with consumers stocking up on cleaning supplies and home decor.
The company said it plans to permanently close roughly 200 of its namesake stores over the next two years, starting later in 2020, as it works toward getting back to profitability against the backdrop of the coronavirus pandemic. As of May 30, it operated a total of 1,478 stores, including 955 Bed Bath & Beyond shops.
Its shares were falling nearly 7% in after-hours trading. Bed Bath — which also owns the chains Buybuy Baby, Christmas Tree Shops and Harmon Face Values — said these actions should generate annual cost savings of between $250 million and $350 million, excluding related one-time costs. “We saw there were a number of stores dragging us down,” Chief Executive Mark Tritton told CNBC in a phone interview. “We will continue to look at the rest of our concept doors, now that we have established the data criteria.”
Read the full article here
Bed Bath and Beyond (NASDAQ: BBBY) latest stock valuation
So what is Bed Bath and Beyond (NASDAQ: BBBY) stock worth based on the release of their latest earnings report? It is always hard to value a loss making company, and we either use cash generated per share as a proxy for earnings or our standard fall back position is using the stockholders equity per share as a base valuation. We therefore value Bed Bath and Beyond at $11.81 a stock. We therefore believe that the stock is undervalued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $11.81. So a good entry point into Bed Bath and Beyond's stock would be at $10.62 or below. Since the stock of Bed Bath and Beyond is trading close to our suggested entry point we rate the stock of BBBY as a Hold
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $11.81. So a good entry point into Bed Bath and Beyond's stock would be at $10.62 or below. Since the stock of Bed Bath and Beyond is trading close to our suggested entry point we rate the stock of BBBY as a Hold
Next earnings release of Bed Bath and Beyond
It is expected that Bed Bath and Beyond will release their 3rd quarter 2020 earnings report in early October 2020