Bed Bath & Beyond (BBBY): Testing A New Membership Program Beyond+ - UBS

September 27, 2016 7:57 AM EDT
Get Alerts BBBY Hot Sheet
Price: $45.69 +2.05%

Rating Summary:
    6 Buy, 20 Hold, 6 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 28 | Down: 20 | New: 17
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UBS analyst, Michael Lasser, reiterated his Neutral rating on Bed Bath & Beyond (NASDAQ: BBBY) and noted that the company is beta testing a new membership program, Beyond+.

The mechanics of the deal are that for a $29 annual subscription fee, the member gets 20% off all purchases at BBBY both in-store & online. Also, they will receive free standard shipping with no minimum while shopping through the digital channel.

From the consumer's perspective, joining makes sense if he or she expects to spend $145 annually. Though, BBBY is likely to continue to offer coupons & free shipping above a certain spending threshold, which will influence interest in the program. According to Checkout Tracking, BBBY shoppers make 2.84 buying visits per year to its stores with an average spend of $120. This is more spend & greater frequency than PIR, TCS, &Williams-Sonoma. BBBY tests new offers all the time.

If the test of the program is successful, it could usher in a time when BBBY stops or limits the distribution of its free coupons. But, that could have severe consequences. BBBY noted it's limiting enrollment in the test, so the near-term financial impact probably won't be significant.

No change to the price target of $45.

For an analyst ratings summary and ratings history on Bed Bath & Beyond click here. For more ratings news on Bed Bath & Beyond click here.

Shares of Bed Bath & Beyond closed at $42.21 yesterday.



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