Wells Fargo Says Poor GMCR Sales Could Weigh on Bed Bath & Beyond (BBBY) Shares; Maintains Market Perform

May 3, 2012 11:06 AM EDT Send to a Friend
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Price: $66.94 --0%

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Wells Fargo maintains a 'Market Perform' on Bed Bath and Beyond (NASDAQ: BBBY).

Analyst, Matt Nemer, said, "Green Mountain Coffee (Nasdaq: GMCR) reported F2Q sales that fell short of the company's expectations and issued F3Q guidance below the Street. This has significantly pressured the shares in after-hours trading (down 41%) and we believe BBBY, as the largest retailer of GMCR products, could see corresponding weakness. Demand for Keurig products has been exceptionally strong (revenue grew 95% in FY2011) and this is the first sign that trends could be slowing down. The company attributed 70% of the FQ2 sales shortfall to lower-than-anticipated sales of KCups (which we believe are top selling items at BBBY) and 30% to lower-than-anticipated brewer sales. While GMCR attributes about onethird of the shortfall in expected KCup sales to warmer weather (which impacted demand for hot chocolate and cider), an underlying slowdown in demand could impact BBBY's earnings."

Nemer also remains cautious, citing sales of nationally branded products that competitors like Amazon.com (Nasdaq: AMZN) could/are moving in on.

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

Shares of Bed Bath and Beyond closed at $71.61 yesterday.


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