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Will Digital Sales Aid Bed Bath & Beyond (BBBY) Q2 Earnings?

Zacks Equity Research
·4 mins read

Bed Bath & Beyond Inc. BBBY is slated to release second-quarter fiscal 2020 results on Oct 1, 2020. In the last reported quarter, the leading specialty retailer delivered a negative earnings surprise of 38%. Moreover, its bottom line substantially missed estimates by 323.3%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for the company’s fiscal second-quarter loss is pegged at 20, whereas it reported earnings of 34 cents in the year-ago quarter. The loss estimate has narrowed by 6 cents in the past 30 days. The consensus estimate for fiscal second-quarter sales is pegged at $2.59 billion, indicating a 4.7% decline from the prior-year quarter’s reported number.

Key Points to Note

Bed Bath & Beyond is one of the few retailers that have been benefiting from consumers’ shift to online shopping amid the pandemic. The company has been witnessing robust sales trends in the digital platform since fourth-quarter fiscal 2019. In the last reported quarter’s earnings call, management noted that the strong online demand continued in June, after having recorded digital sales growth of more than 100% in April and May each. The online sales trends continued to propel in June despite the reopening of nearly 80% of its store base. The uptick has been attributed to the expansion of Buy-Online-Pick-Up-In-Store (BOPIS) as well as Curbside Pickup services, which is expected to have aided online sales performance through the fiscal second quarter.

Additionally, the company’s efforts to expedite the delivery and supply-chain network through the conversion of roughly 25% of Bed Bath & Beyond and buybuy BABY stores in the United States and Canada into regional fulfillment centers have been paying off. This helped it double its digital fulfillment capacity to match the rising digital sales. Gains from these trends are also likely to get reflected in the company’s robust digital sales results for the to-be-reported quarter.

Bed Bath Beyond Inc. Price and EPS Surprise

 

Bed Bath  Beyond Inc. Price and EPS Surprise
Bed Bath Beyond Inc. Price and EPS Surprise

Bed Bath Beyond Inc. price-eps-surprise | Bed Bath Beyond Inc. Quote

Furthermore, management noted that it has been witnessing positive sales for the reopened stores in June. This is likely to have contributed to sales in the fiscal second quarter.

However, the company is likely to have witnessed a soft margin in the fiscal second quarter due to adverse channel and product mix resulting from consumers shifting preference to the digital platform. Additionally, a rise in fulfillment costs, soft margins of products sold and elevated fixed costs might have hurt margins to some extent.

Zacks Model

Our proven model predicts an earnings beat for Bed Bath & Beyond this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Bed Bath & Beyond currently has a Zacks Rank #3 and an Earnings ESP of +285.00%.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Deckers Outdoor Corporation DECK has an Earnings ESP of +5.43% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Whirlpool Corporation WHR has an Earnings ESP of +9.25% and a Zacks Rank #2.

Kimberly-Clark Corporation KMB currently has an Earnings ESP of +2.65% and a Zacks Rank #2.

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KimberlyClark Corporation (KMB) : Free Stock Analysis Report
 
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