Bath Bath & Beyond’s Revenue To Fall In Q1 2019?

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BBBY: Bed Bath & Beyond logo
BBBY
Bed Bath & Beyond

Bed Bath & Beyond (NASDAQ: BBBY) is set to announce its Q1 2019 (ended May 2019) results on July 10, 2019, followed by a conference call with analysts. The market expects the company to report revenue close to $2.6 billion in Q1 2019 (ended May 2019), which would be a decrease of 6.8% y-o-y driven by the continued declines in in-store traffic which is in line with Trefis expectations. Market expectation is for the company to report earnings of $0.08 per share in Q1 2019 (ended May 2019), down from $0.32 per share in the year-ago period.

Bed Bath & Beyond reported $12 billion in Total Revenues in FY 2018. This included 5 revenue streams:

  • Bed Bath & Beyond : $7.9 billion in FY 2018 (65.9% of Total Revenues). This includes the revenue earned from the Bed Bath and Beyond Stores.
  • Christmas Tree Shops: $1.6 billion in FY 2018 (13.2% of Total Revenues). This includes the revenue earned from the Christmas Tree Shops.
  • Harmon & Harmon Face Values: $0.1 billion in FY 2018 (0.9% of Total Revenues). This includes the revenue earned from the Harmon & Harmon Face Values stores.
  • buybuy Baby: $1.3 billion in FY 2018 (11.1% of Total Revenues). This includes the revenue earned from the buybuy Baby stores.
  • World Market Stores: $1.1 billion in FY 2018 (8.8% of Total Revenues). This includes the revenue earned from the World Market Stores.

We have summarized our key expectations from the earnings announcement in our interactive dashboard – What Has Driven Bed Bath & Beyond’s (BBBY) Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full-Year 2019? In addition, here is more Consumer Discretionary data.

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Key Factors Affecting Earnings:

Revenue expected to falter:

  • BBBY’s Net sales for Q4 FY 2018 dropped compared to the same period in FY 2017 due to a decrease in comparable sales and was also impacted by one less week in the year compared to FY 2017. The retailer’s comparable store sales declined in the mid-single-digit percentage range.
  • Total Revenues for Bed Bath & Beyond changed from $12 billion in 2017 to $11.5 billion in 2018; a decrease of of 3%. This was driven primarily by a decline in the company’s store comparable sales. This compares with revenue growth of 1% in 2017 compared to 2016, 3% in 2016 compared to 2015.
  • Further, we expect revenue growth to be -2.8% in 2019 driven by an expected decrease in comparable sales to about low/mid-single-digit percentage range, due to low same-store sales, partially offset by anticipated growth in digital channels as well as optimization of its coupon strategy.

Trend in Expenses:

  • Cost of Revenue has been consistently around 63-66% of Total Revenue and we estimate the same to continue.
  • Total Expenses saw a big jump in Q4 FY 2018 due to a goodwill and a trade name impairments charge of $509 million which is not expected to repeat in FY 2019.

Full Year Outlook:

  • For the full year, we expect gross revenue to decrease by 2.8% to $11.7 billion, driven primarily by a decrease in comparable sales.
  • Gross margin is expected to decrease slightly to 33.7%.

 

Trefis has a price estimate of $15 per share for BBBY’s stock. The value is based on the expectation that the company will go through a decline in revenue and gross margins in the near future.

 

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