Bed Bath & Beyond $BBBY Bloodbath As EPS Chopped Off

  • Post category:Options Trading
  • Reading time:6 mins read
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BBBY stock is continuing in a downtrend after the company massively reduced its EPS forecast on January 6, 2022.

Bed Bath & Beyond cuts FY21 adjusted EPS view to (15c)-0c from 70c-$1.10

This is one of the largest EPS forecast cuts by a major corporation that we’ve seen in years. The Wall Street consensus for EPS in FY21 was $78c. The company cut its FY21 revenue view to approximately $7.9B from $8.1B-$8.3B versus the consensus forecast of $8.2B. On a comparable sales basis, the company expects high-single digit growth for the full fiscal year vs. prior view of flat to up slightly.

CEO Tritton said, “In response to a sharp increase in inflation and pervasive freight and supply chain headwinds, we swiftly implemented market-driven pricing, promo optimization and product mix plans. Our decisive actions led to an adjusted gross margin rate significantly exceeding plan and above 2020 and 2019 – a key financial barometer of our three-year transformation strategy. Our Owned Brands also continued to produce higher merchandise margins at increased penetration rates. We now intend to expand the Owned Brands strategy to BABY in 2022 as we look at margin enhancing strategies, given sales results in this business have stabilized as a result of our targeted efforts to improve this banner. We are identifying exciting new opportunities to drive sales and BABY is an important cornerstone of our plans, including our recently announced collaboration with Kroger and our own digital marketplace. Just as we delivered on gross margin during the quarter, our holistic focus is on improving our top and bottom line results as we continue to transform. While we continue to target sales improvement, we are also focused on SG&A. We are pursuing additional expense optimization measures of approximately $100 million annualized that will explore areas such as store fleet optimization, fixed costs and discretionary savings opportunities. Earlier this quarter we also announced that we expect to complete our $1 billion three-year share repurchase plan by the end of fiscal 2021, two years ahead of schedule, which underscores our ongoing confidence in our turnaround and commitment to our capital allocation framework. Having concluded just the third quarter of our multi-year plan, we will continue to execute our strategic transformation by diagnosing and reforming our legacy business to achieve our goals. As we prepare for 2022, we look forward to operating in a normalized environment with a base of business upon which to grow.”

Bed Bath & Beyond reports Q3 SSS down 7%

Mark Tritton, Bed Bath & Beyond’s President and CEO said, “During a quarter where our sales momentum was not where we wanted it to be with sales of $1.9 billion and a 7% comp decline, improved momentum in November and strong gross margins demonstrated progress in our transformation. After our previously announced slower start to sales in September and October, we drove a change in trends by November with our comp decline improving, particularly in stores. However, overall sales were pressured despite customer demand due to the lack of availability with replenishment inventory and supply chain stresses that had an estimated $100 million, or mid-single digit, impact on the quarter and an even higher impact in December. Nevertheless, our customer acquisition strategy for the Bed Bath banner is gaining traction as evidenced by our Beyond+ loyalty program, which grew by nearly half a million members after one of our largest new subscriber quarters. Our buybuy BABY banner continues to deliver double-digit growth and we are on track to achieve approximately $1.3 billion in sales in this first year of transformation – ahead of our investor day goals – all while improving profitability and market share.”

BBBY Put Option Flow

We are seeing unusual put option flow in BBBY stock.

Bbby Option Flow

Make sure to review this lesson on option flow so that you understand the image above.

📺 Why Bed Bath & Beyond Is Facing Extinction


📉 BBBY Stock Technical Analysis

Bbby Stock

Both the long and short-term trends are negative. It is better to avoid buying stocks with negative trends. BBBY is one of the lesser performing stocks in the Specialty Retail industry. 78% of 114 stocks in the same industry do better. BBBY is currently trading near the lower end of its 52-week range, which is not a good sign considering that the S&P500 Index is trading near new 52 week highs at the moment.

There is a support zone ranging from 15.07 to 15.16. This zone is formed by a combination of multiple trend lines and important moving averages in the daily time frame. There is also a support zone ranging from 13.36 to 13.38. This zone is formed by a combination of multiple trend lines in multiple time frames.

There is resistance at 19.01 from a trend line in the daily time frame. There is also resistance at 20.61 from a trend line in the weekly time frame.

The technical rating of BBBY is bad and it also does not present a quality setup at the moment. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when BBBY stock consolidates and is a good long entry.

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