Earnings Preview: Bed Bath & Beyond

Bed Bath & Beyond (BBBY) is expected to report Q4 earnings Wednesday with a conference call scheduled for 5:00 pm ET.

Guidance

Analysts are looking for a profit of 65c on revenue of $1.96B. The consensus range is 59c to 67c for EPS, and revenue of $1.89B to $2.08B, according to First Call.

When the company reported Q3 results in January, it forecast Q4 EPS of 64c to 67c and FY07 EPS of $2.08 to $2.11.

Analyst analysis

On March 28, a JP Morgan analyst downgraded Bed Bath & Beyond shares to Underweight from Neutral. The broker said recent commentary from competitors such as Wal-Mart (WMT), Target (TGT), Costco (COST) and JC Penney (JCP) suggests consumer spending is being reined in because of economic uncertainty, a trend which is also likely to hurt Bed Bath & Beyond. JP Morgan said its margins on earnings before interest and tax have been falling since the fourth quarter of 2005 because it has been costing the home furnishings retailer more to generate sales due to competition from companies like Wal-Mart, department stores and Linen N Things.

Another research firm, Oppenheimer, believes that the company's shares will recover when the macro economy improves.

An analyst at Jesup & Lamont agrees, and believes that despite all of the positive attributes Bed Bath & Beyond has enjoyed, the company remains in the midst of a drastic change in its growth phase. Jesup & Lamont continues to believe Bed Bath & Beyond will remain the premier-retailer selling domestic merchandise.

Comments

[Droolingelmo]

BBBY is always going to win, regardless of the economy. If things are good, you buy a new house and the wife says 'It's a new house, we need new curtains, towels and sheets'. If the economy is bad and you can't afford a new house the wife says, "If we can't afford a new house we need to spruce up this one. We need new curtains, towels and sheets"

Our perceptions of BBBY change but the company is still the same, frugal, focused and financially sound.