Earnings Preview: Bed Bath & Beyond

Jan. 6.09 | About: Bed Bath (BBBY)

Bed Bath & Beyond (NASDAQ:BBBY) is expected to report Q3 earnings after market close, Wednesday, January 7, with a conference call scheduled for 5:00 pm ET.

Guidance

Analysts are looking for a profit of 33c on revenue of $1.79B. The consensus range is 31c-34c for EPS, and revenue of $1.78B-$1.86B, according to First Call. In December, the company forecast Q3 EPS 31c-35c and revenue down by approximately 0.7% from net sales reported a year ago. The company believes Q3 SSS declined approximately 5.6%. In October, president and Chief Merchandising Officer Arthur Stark sold nearly three-quarters of his holdings and continues to own less than 1% of the company's shares outstanding. Jason Raznick, vice president of StreetInsider.com, says the fact that Stark sold such a large portion of his holdings when the stock was near a low "definitely raises a serious red flag".

Analyst Views

Zacks analyst Charles Rotblut believes that even if the company matches earnings expectations, there is a "real possibility" that its FY09 guidance could be disappointing given the horrible holiday shopping season. The retailer said it's cutting spending 50% to $600M in its next fiscal year, according to the Wall Street Journal. And, in a poor economic climate that won't end anytime soon, it has lost half of its market value. The company, who has offered positive surprises over the past several quarters, knows how to cut back and cut pressure. Store layout upgrades can wait and administrative expenses are being reduced.