Bed Bath & Beyond's 'ugly' Q3 results may accelerate bankruptcy - analysts

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By Senad Karaahmetovic

Bed Bath & Beyond (NASDAQ:BBBY) stock is trading higher today despite the retailer reporting lower-than-expected financial results for its third quarter.

Bed Bath & Beyond said its net sales fell 33% year-over-year to $1.26 billion, which is in line with the business update from last week. The adjusted EPS came in at negative $3.65, a large miss compared to expectations for a loss of $2.38.

Gross margins fell to 22.8%, missing the Street consensus by about 500 basis points. Overall, comparable sales fell 32% year-over-year while the Street was looking for a 23.9% drop.

BBBY also said it had negative $307.6M in cash from operations, ending the quarter at around $500M of liquidity, down from the prior $850M.

"We will continue to rebalance our assortment towards National Brands and refine our Owned Brands mix to reflect the deep understanding of our customer, along with the selection and value only we can offer in the Home and Baby markets,” the company said in a statement.

Vital Knowledge analysts took note of “ugly financial results,” which “may only accelerate the process to the extent they spook suppliers further.”

“The only bright spot is the aggressive cost cutting taking place, but this isn’t enough to outrun the slump in sales. Inventories fell Q/Q and Y/Y, which in normal conditions would be positive, but for BBBY this is one of the problems exacerbating the revenue pressure,” they wrote to clients.

BBBY warned last week that bankruptcy was a possibility with some media outlets reporting that a Chapter 11 filing could take place in the next couple of weeks.

In another meme stock rally, BBBY stock is up 32% at 10:00 ET (15:00 GMT).