Can This Retailer Compete With Amazon?

Photo Credit:Mike Mozart

Bed Bath & Beyond, Inc (BBBY) Consumer Discretionary - Specialty Retail | Reports April 6, After Market Closes

Speciality retailer, Bed Bath & Beyond is scheduled to report first quarter earnings tomorrow after the market closes. Lately the retail sector has been dominated by Amazon while everyone else plays catchup to expand their omni channel capabilities. The move to a more online centric business has come at the cost of near term earnings growth and share price growth. For Bed Bath and Beyond this has been no different, seeing shares of its stock fall nearly 40% in the past 12 months on flat growth.

The Estimize consensus is calling for earnings per share of 85 cents on $2.77 billion in revenue, right in line with Wall Street. Compared to a year earlier this represents an 8% decline on the bottom line and 1% increase on the top. BBBY is typically a negative mover during earnings season, seeing its biggest drops through and 30 days following a report. Unfortunately, another troubling report will likely drop the stock even further.

Despite a weak holiday season, Bed Bath & Beyond delivered positive growth in its fourth quarter report. The company reported 3% growth on the bottom line and 2% on the top, driven by strong digital sales. Comparable sales increased by 1.7% on a 25% increase in digital channels while sales from stores were relatively flat during the quarter. Unfortunately, on the year the company saw net cash from operating and investing activities fall with its cash position weakening.

Bed Bath & Beyond is still expected to expand on its growth strategy by lowering its free shipping threshold and by continuing its acquisition strategy. On the heels of its report, the company agreed to acquire One Kings Lane at a fraction of its $1 billion valuation. The deal positions Bed Bath & Beyond to grow in the ecommerce space, but additional investments will put pressure on earnings in the near term.