Shares of Bed Bath & Beyond Inc. BBBY declined 6.3% yesterday in the after hour trading session after the company lowered its third-quarter fiscal 2015 projections. The company also provided update on the comparable sales for the fourth quarter of fiscal 2015.
Bed Bath & Beyond expects net sales for the third quarter to increase nearly 0.3% year over year to $3 billion, sharply lower than its previous estimate of increase in the range of nearly 1.8% to 4%. The company has also revised its comparable store sales estimates and now expects comparable stores sales to decrease 0.4% in comparison to the company’s previous estimate of increase in the range of 1% to 3%.
Consequently, the company also lowered the earnings estimates for the third-quarter of fiscal 2015. The company now expects net earnings per share in the range of $1.07 to $1.10, well below the company’s previous estimate of around $1.14 to $1.21. The Zacks Consensus Estimate for the third-quarter of fiscal 2015, which is pegged at $1.18, may witness downward estimate revision in the coming days.
Lower-than-expected third-quarter estimate was primarily due to weaker in-store transaction counts as well as overall softness in the retail sector in the third quarter. On the positive side, the company’s online sales reported robust growth of over 25%. The company expects comparable sales from the starting of the fourth-quarter of fiscal 2015 to increase roughly 1%.
Although, the company trimmed its guidance we cant’s ignore its strategic initiatives, including store expansion, eCommerce enhancement and improvement of customer services that may act as a catalyst future.
Zacks Rank
Bed Bath & Beyond currently has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in this sector include Regis Corp. RGS, CST Brands, Inc. CST and ULTA Salon, Cosmetics & Fragrance, Inc. ULTA. Regis sports a Zacks Rank #1 (Strong buy) whereas CST Brands and ULTA Salon, Cosmetics & Fragrance holds a Zacks Rank #2 (Buy).
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