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Category: Stock Market and Bed Bath & Beyond
Date: 4 October 2019 Stock Price: $10.29 We take a look at the 2nd quarter earnings report of their 2019 fiscal year of Bed Bath and Beyond, the struggling home furnishings firm that made a loss of almost -$139 million during the second quarter of their 2019 fiscal year.
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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: $2.79 billion down from $2.935 billion for the same quarter of the previous year)
- Net sales decreased by -4.94% over the last 12 months
- Cost of sales: $1.992 billion (up from $1.946 billion for the same quarter of the previous year)
- Cost of sales increased by 2.36% over the last 12 months
- Net loss: -$138.765 million (down from a profit of $48.639 million for the same quarter of the previous year)
- Diluted loss per share: -$1.12 (down from $0.36 per share for the same quarter of the previous year)
- Dividend per share: $0.17
- Dividend yield: 6.6%
- Diluted weighted-average shares outstanding: 123.349 million (up from 135.675 million for the same quarter of the previous year)
- Cash and cash equivalents: $983 million
- Cash and cash equivalents per share: $7.96
- Cash and cash equivalents makes up 77.45% of Bed Bath and Beyond's market capital
- Cash and cash equivalents makes up 12.42% of Bed Bath and Beyond's total assets
- Inventories: $2.334 billion
- Inventories makes up 29.48% of Bed Bath and Beyond's total assets
- Stockholders equity of Bed Bath and Beyond: $1.903 billion
- Stockholders equity per share for Bed Bath and Beyond's : $15.42
- So Bed Bath and Beyond's is trading at 0.66 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.
- Stockholders equity per share for Bed Bath and Beyond's : $15.42
- Cash generated from operations (for 6 months); $255.903 million
- Cash generated from operations per share: $2.07
Bed Bath and Beyond's management commentary on the results
UNION, N.J., Oct. 2, 2019 /PRNewswire/ -- Bed Bath & Beyond Inc. (Nasdaq: BBBY) today reported financial results for the second quarter of fiscal 2019 ended August 31, 2019.
Mary A. Winston, Interim CEO, stated, "We are making good progress against our four key near-term priorities, including: (1) stabilizing sales and driving top-line growth; (2) resetting the cost structure; (3) reviewing and optimizing the Company's asset base, including the portfolio of retail banners; and (4) refining our organization structure. Our second quarter financial results reflect the relentless effort of our teams and our progress in driving the Company's transformation efforts to delight our customers, enhance our competitive position, improve our financial performance, and drive shareholder value."
Capital Allocation
Today, the Company's Board of Directors declared a quarterly dividend of $0.17 per share payable on January 14, 2020 to shareholders of record at the close of business on December 13, 2019. During the fiscal 2019 second quarter, the Company repurchased approximately $16.5 million of its common stock, representing approximately 1.4 million shares. The Company ended the fiscal 2019 second quarter with approximately $1.0 billion in cash and investments, compared with approximately $1.1 billion in cash and investments at the end of the fiscal 2018 second quarter.
Fiscal 2019 Updated Financial Outlook
Fiscal 2019 full-year results continue to be in line with the Company's most recent guidance and assumes current investment plans to drive top-line performance in the back half, as well as its comp sales trends year to date, and excludes goodwill and other impairments, severance costs, shareholder activity costs, the inventory write down, and any incremental impact from tariffs. Fiscal 2019 full-year net sales are estimated to be around $11.4 billion and net earnings per diluted share are estimated to be between $2.08 and $2.13.
Due to the inherent difficulty of forecasting the timing or amount of items that have not yet occurred and are out of the Company's control, and that would impact its net earnings per diluted share, for fiscal 2019 on a GAAP basis, the Company has not provided a reconciliation of its adjusted net earnings per diluted share for its fiscal 2019 full-year outlook on a GAAP basis. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.
CEO Search
The Company has made substantial progress toward identifying a permanent CEO. The Company remains on track with its expectation that it will make an announcement soon.
Mary A. Winston, Interim CEO, stated, "We are making good progress against our four key near-term priorities, including: (1) stabilizing sales and driving top-line growth; (2) resetting the cost structure; (3) reviewing and optimizing the Company's asset base, including the portfolio of retail banners; and (4) refining our organization structure. Our second quarter financial results reflect the relentless effort of our teams and our progress in driving the Company's transformation efforts to delight our customers, enhance our competitive position, improve our financial performance, and drive shareholder value."
Capital Allocation
Today, the Company's Board of Directors declared a quarterly dividend of $0.17 per share payable on January 14, 2020 to shareholders of record at the close of business on December 13, 2019. During the fiscal 2019 second quarter, the Company repurchased approximately $16.5 million of its common stock, representing approximately 1.4 million shares. The Company ended the fiscal 2019 second quarter with approximately $1.0 billion in cash and investments, compared with approximately $1.1 billion in cash and investments at the end of the fiscal 2018 second quarter.
Fiscal 2019 Updated Financial Outlook
Fiscal 2019 full-year results continue to be in line with the Company's most recent guidance and assumes current investment plans to drive top-line performance in the back half, as well as its comp sales trends year to date, and excludes goodwill and other impairments, severance costs, shareholder activity costs, the inventory write down, and any incremental impact from tariffs. Fiscal 2019 full-year net sales are estimated to be around $11.4 billion and net earnings per diluted share are estimated to be between $2.08 and $2.13.
Due to the inherent difficulty of forecasting the timing or amount of items that have not yet occurred and are out of the Company's control, and that would impact its net earnings per diluted share, for fiscal 2019 on a GAAP basis, the Company has not provided a reconciliation of its adjusted net earnings per diluted share for its fiscal 2019 full-year outlook on a GAAP basis. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.
CEO Search
The Company has made substantial progress toward identifying a permanent CEO. The Company remains on track with its expectation that it will make an announcement soon.
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 $65.20 a stock and its currently trading at $10.29 a stock. That's a very negative return of -84.2% 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 $7.31 than it is to its 52 week high of $19.57 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.
Recent coverage of Bed Bath and Beyond
The extract below shows some of the latest coverage on Bed Bath and Beyond obtained from TheStreet.com
Bed Bath & Beyond Inc. (BBBY - Get Report) shares moved between gains and losses Thursday after the home-furnishings retailer posted weaker-than-forecast same-store sales and trimmed its full-year profit guidance, amid its ongoing turnaround program. For the fiscal second quarter ended Aug. 31, the Union, N.J., retailer reported a net loss of $1.12 a share, compared with net income of 36 cents in the year-earlier quarter.
Adjusted earnings came in at 34 cents a share, down 10.5% from the year earlier but 5 cents ahead of the Wall Street consensus forecast. Net sales, the company said, fell 7.3% to $2.7 billion, just shy of analysts' estimates of a $2.76 billion tally. Same-store sales, however, fell 6.7%, off from the 5.4% decline that investors had been expecting. Looking into the final months of 2019, Bed Bath & Beyond said it sees full-year earnings of between $2.08 and $2.13 a share, down from a prior forecast of $2.11 to $2.20, and said it had made "substantial progress" in its search for a new CEO.
Reports say that the company will close another 20 stores, in addition to the 40 store closings it announced in April. "We feel good about the progress we are making against our four key near-term priorities, including stabilizing sales and driving top line growth, resetting the cost structure, reviewing and optimizing the company's asset base, including the portfolio of retail banners, and refining our organization structure," interim CEO Mary Winston told investors on a conference call late Wednesday.
Read the full article here
Bed Bath & Beyond Inc. (BBBY - Get Report) shares moved between gains and losses Thursday after the home-furnishings retailer posted weaker-than-forecast same-store sales and trimmed its full-year profit guidance, amid its ongoing turnaround program. For the fiscal second quarter ended Aug. 31, the Union, N.J., retailer reported a net loss of $1.12 a share, compared with net income of 36 cents in the year-earlier quarter.
Adjusted earnings came in at 34 cents a share, down 10.5% from the year earlier but 5 cents ahead of the Wall Street consensus forecast. Net sales, the company said, fell 7.3% to $2.7 billion, just shy of analysts' estimates of a $2.76 billion tally. Same-store sales, however, fell 6.7%, off from the 5.4% decline that investors had been expecting. Looking into the final months of 2019, Bed Bath & Beyond said it sees full-year earnings of between $2.08 and $2.13 a share, down from a prior forecast of $2.11 to $2.20, and said it had made "substantial progress" in its search for a new CEO.
Reports say that the company will close another 20 stores, in addition to the 40 store closings it announced in April. "We feel good about the progress we are making against our four key near-term priorities, including stabilizing sales and driving top line growth, resetting the cost structure, reviewing and optimizing the company's asset base, including the portfolio of retail banners, and refining our organization structure," interim CEO Mary Winston told investors on a conference call late Wednesday.
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 $15.42 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 $15.42. So a good entry point into Bed Bath and Beyond's stock would be at $13.90 or below. Since the stock of Bed Bath and Beyond is trading well below our suggested entry point we rate the stock a buy at its current depressed price.
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 $15.42. So a good entry point into Bed Bath and Beyond's stock would be at $13.90 or below. Since the stock of Bed Bath and Beyond is trading well below our suggested entry point we rate the stock a buy at its current depressed price.