Bed Bath & Beyond An Ill Omen Of Retail (BBBY)

Bed Bath & Beyond (NASDAQ: BBBY) has posted $0.52 EPS on $1.795 Billion in revenues, while First Call had estimates pegged at $0.52 EPS on revenues of $1.77 Billion.  This would be OK on its own if it hadn’t issued a warning of this magnitude:

• For the fiscal fourth quarter ending March 1, 2008, the Company estimates it will earn approximately $0.64 to $0.67 EPS, although First Call has estimates at $0.78 and it earned $0.79 for the fourth quarter last year.

The company did note that the coming quarter has one less retail week than last year, but that doesn’t come close to making up for this shortfall.

The sad part of this is that Bed Bath & Beyond has been thought of as a nearly immune company in the past over economic softness.  If the gals aren’t out buying their goodies for home at Bed Bath & Beyond, then it means the rest of us are cutting back left, right and center.  We have been teetering between calls for a recession and calls for a major slowing with limited to nil growth.  This is more indicative of a recession than a slowdown, at least if we can still use the BBBY as the safety port of call in past storms analogy. 

BBBY shares closed down over 3% at $27.40, under the 52-week low of $27.96.  Because of the warning it is seeing shares down another 8% to $25.25 in after-hours.  When you look at retail stocks hitting 52-week low after 52-week low, now you know why.  Chances are that a bottom hasn’t been found yet.  This is when some value stocks become value traps.

Jon C. Ogg
January 3, 2008