Yahoo Finance Bed Bath & Beyond falls on weak 3Q, cut outlooks
Bed Bath & Beyond drops as 3Q results miss Street's view, cuts 4Q, full-year profit forecasts
NEW YORK (AP) -- Shares of Bed Bath & Beyond dropped Thursday after its third-quarter performance missed analysts' estimates and it lowered its fourth-quarter and full-year earnings forecasts.
Late Wednesday Bed Bath & Beyond Inc. reported third-quarter earnings of $1.12 per share on revenue of $2.86 billion. Analysts polled by FactSet predicted earnings of $1.15 per share on revenue of $2.88 billion.
The Union, N.J. company, which owns retailers including Cost Plus World Market and Bed Bath & Beyond, cut its fourth-quarter earnings guidance to a range of $1.60 to $1.67 per share. It previously forecast earnings of $1.70 to $1.77 per share. Wall Street is calling for earnings of $1.79 per share.
For the full year, Bed Bath & Beyond now anticipates earnings between $4.79 and $4.86 per share. The prior outlook was for $4.88 to $5.01 per share. Analysts expect earnings of $5.02 per share.
Credit Suisse's Gary Balter said in a client note that Bed Bath & Beyond is well-managed and the dominant leader in its segment. But following a strong stock performance in 2013 and softer-than-expected revenue and gross margins in the third quarter, the analyst doesn't think there's enough upside to currently recommend the stock.
The analyst cut Bed Bath & Beyond's rating to "Neutral" from "Outperform" and reduced its price target to $78 from $85.
Kate McShane of Citi Investment Research said that the worse-than-expected gross margins were due to increased acquisition costs, ongoing increases in coupon redemption and average coupon amount and a shift toward lower-margin products. Still, the analyst anticipates gross margins will stabilize over the long term because of technology investments that should let it target coupons better.
McShane trimmed the retailer's price target to $85 from $88 and reaffirmed a "Buy" rating, saying that management sounded optimistic about its business.
"Competitively we think Bed Bath & Beyond is well positioned with its differentiated product and decentralized offerings," the analyst wrote.
Bed Bath & Beyond's stock slid $9.88, or 12. 4 percent, to $69.80 in morning trading. The stock has traded between $54.62 and $80.82 over the past year.
