Bed Bath & Beyond (BBBY) Misses Q3 EPS by 11c

Bed Bath & Beyond (NASDAQ: BBBY) reported Q3 EPS of $0.08, $0.11 worse than the analyst estimate of $0.19. Revenue for the quarter came in at $2.62 billion versus the consensus estimate of $2.75 billion.

• +5% comparable sales growth on core Bed Bath & Beyond banner1; +2% comparable sales growth on total enterprise

Outlook:

Fiscal 2020 Fourth QuarterGiven the significant COVID-related headwinds including heavy store traffic declines, major shipping constraints and higher freight costs, the Company is not providing specific sales and earnings guidance for the fiscal 2020 fourth quarter. The Company is assuming that its stores will remain open and not be required to close due to government restrictions.

Directionally, the Company expects to continue driving significant sales growth from its digital channels, while sales from stores are anticipated to be unfavorably impacted by declines in store traffic trends. On a comparable sales basis, total enterprise comparable sales in the fiscal 2020 fourth quarter are expected to be approximately in line with the prior year period, with expectations for consistent strength in digital and growth in destination categories to be tempered by COVID-related headwinds impacting stores. Additionally, based on preliminary unaudited results, in December, the first month of the fourth quarter, the Company expects total enterprise comparable sales growth to be positive, including continued strength across key destination categories. Net sales in the fiscal 2020 fourth quarter are estimated to be lower by a double-digit percentage range, as a direct result of adjustments from transforming the Company's overall portfolio, including non-core banner divestitures and store closing activity related to its network optimization initiative.

The Company expects adjusted EBITDA Margin to be higher on a year-over-year basis in the fiscal 2020 fourth quarter. Additionally, Gross Margin and adjusted EBITDA are expected to be approximately in line with the prior year period, as the Company plans to offset significantly higher freight costs through optimization of promotion and markdowns, favorable product mix, and leverage of distribution and fulfillment costs.

Fiscal 2021During the Company's Investor Day meeting on October 28, 2020, it outlined its long-term financial goals to strengthen and accelerate growth and drive and unlock sustainable total shareholder return. With its core portfolio banner work now complete (the final transaction is set to close in the fiscal 2020 fourth quarter), fiscal 2021 EBITDA is being enhanced to a range of $500 to $525 million. Healthy revenue growth trends continue in the Company's digital business and in its top destination categories. Further, the Company remains focused on the key drivers of gross margin expansion and on optimizing costs. With this, it feels confident in continuing to deal with the COVID-related headwinds resulting from lower store traffic and increases in shipping costs. The Company is assuming that its stores will remain open and not be required to close due to government restrictions.

Additional details on the Company's fiscal 2021 outlook will be provided during its third quarter conference call with analysts and investors as well in its investor presentation available on the investor relations section of the Company's website.

For earnings history and earnings-related data on Bed Bath & Beyond (BBBY) click here.

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