Bed Bath & Beyond is up 20% despite weak results: how come?

Bed Bath & Beyond Inc (NASDAQ: BBBY) on Thursday reported its financial results for the third quarter that missed Wall Street estimates. Shares still climbed 20% as retail investors returned to support the stock.

Q3 financial performance

Bed Bath & Beyond reported a surprise loss of $276.4 million in Q3 that translates to $2.78 per share. In the same quarter last year, it had lost $75.4 million or 61 cents per share. On an adjusted basis, the retailer noted 25 cents of per-share loss.

The Nasdaq-listed company generated $1.878 billion in sales versus the year-ago figure of $2.618 billion. According to FactSet, experts had forecast 1 cent of EPS on $1.951 billion in sales for the third quarter.

CEO Tritton’s remarks

CEO Mark Tritton attributed the weakness to the ongoing supply constraints. In the earnings press release, he said:

Overall sales were pressured despite customer demand due to the lack of availability with replenishment inventory and supply chain stresses that had an estimated $100 million, or mid-single-digit impact on the quarter and an even higher impact in December.

On the plus side, Beyond+ loyalty programme added nearly half a million members in Q3. Bed Bath & Beyond’s namesake brand tanked 10%, resulting in a 7.0% annualised decline in comparable sales – significantly worse than 0.9% that analysts had predicted. BuyBuy Baby, however, was up over 15%.

Future outlook

For the current quarter, Bed Bath & Beyond forecasts up to 15 cents of adjusted EPS and $2.1 billion in sales. In comparison, experts had called for 70 cents of per-share earnings on $2.25 billion in sales.

The American chain of domestic merchandise retail stores also gave dovish guidance for the full year. It expects under 10% growth in same-store sales this year, up to 15 cents of per-share loss and $7.9 billion in sales. This compares to an 11.7% increase in comparable sales, 74 cents of EPS, and $8.14 billion in sales that experts had forecast.