This meme name operates as a retail store chain. It sells domestic merchandise, bath items, kitchen textiles, and home furnishings. It sells its offerings through various websites and applications. The company announced…
leadership changes in June, replacing CEO Mark Tritton with the head of the strategy committee and independent director Sue Gove as CEO on an interim basis. Bed Bath & Beyond Inc. (BBBY) replaced top management after billionaire activist investor Ryan Cohen criticized the retailer for an “overly ambitious” strategy, overpaying top executives, and failing to reverse market share losses.
However, to everyone’s surprise, a securities filing released last week showed that Cohen exited his position in BBBY, dumping its stock on Tuesday and Wednesday. Cohen is Chewy’s (CHWY) co-founder and GameStop Corporation (GME) Chairman.
BBBY saw a huge trading volume this month due to a resurgence in meme stock trading, becoming the dominant topic of conversation on Reddit’s WallStreetBets page. The stock has a 41.46% short float. It has gained 89.9% over the past month. However, the stock plummeted 40.5% intraday to close its last trading session at $11.03.
Here are the factors that could affect BBBY’s performance in the near term:
Bleak Financials
For the fiscal first quarter ended May 28, BBBY’s net sales decreased 25.1% year-over-year to $1.46 billion. Adjusted EBITDA declined 360.5% from the prior-year quarter to a negative $224 million. Adjusted net income and adjusted EPS came in at a negative $225 million and a negative $2.83, down 4,600% and 5,760% from the same period the prior year.
Negative Profitability Margins
BBBY’s trailing-12-month gross profit margin of 31.04% is 15.4% lower than the industry average of 36.70%. The stock’s trailing-12-month net income margin of a negative 11.74% is significantly lower than the industry average of 6.16%. Its trailing-12-month ROE, ROTC, and ROA of a negative 195.47%, 6.69%, and 17.51% compare to their respective industry averages of 15.82%, 7.09%, and 5.23%.
Bleak Bottom-line Growth Expectations
The consensus EPS estimates of a negative $1.56 and a negative $1.14 for the respective quarters ending August and November 2022 indicate 4,000% and 356% year-over-year decreases. Street EPS estimate for the fiscal year 2023 of a negative $6.04 reflects a decline of 459.3% from the prior year. Likewise, Street revenue estimate for the same year of $6.52 billion indicates a 17.1% year-over-year decrease.
POWR Ratings Reflect A Bleak Outlook
BBBY’s POWR Ratings reflect this bleak outlook. The stock has an overall…
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