Bed, Bath And Beyond’s Surprise Earnings Win

In another piece of the era of (perhaps temporary) good feeling that is roaring through a surprising number of retail segments this holiday season, Bed Bath & Beyond managed a surprise earnings beat to end out the year.  Analysts were looking for earnings of 38 cents a share on sales of $2.9 billion.  What they got was net earnings of 44 cents per share on sales of $2.95 billion.

There were still areas of concern in the report. Though better than expected, earnings were still down on an year-on-year decline for an EPS of 85 cents.  Same store sales were flat, notching a slight decline of 0.3 percent.  That is better than the 2.4 percent decline analysts were expecting.

Customers were transacting less in stores during the third quarter of the year, but, according the retailer, they were spending more per average transaction. Combined with “strong growth” from eCommerce channels, these numbers pushed Bed Bath and Beyond’s better than expected performance in the penultimate quarter of the year.

But better than expected middling performance failed to inspire analysts, and the retailer saw its share drop a steep 13 percent in after hours trading on investors fears that it is about to underperform this holiday season.

In response to concerns,  CEO Steven Temares noted that the stores are working to create a “treasure hunt” experience for its shoppers.

“Treasure hunt is represented in the differentiated mix of merchandise consisting of product that is new, fresh and/or has limited availability,” he said in a call with analysts. “These types of products exist across many of our categories, including furnishings and decor and our seasonal departments. Going forward, we plan to put a greater emphasis on these elements in our Bed Bath & Beyond stores and incorporate our successes from across all of our retail concepts to more fully leverage them.”

He also told investors and analysts that the chain would be “noticeably different” beginning in March, with a greater focus on design than stocking core Bed Bath & Beyond merchandise.