Bed Bath & Beyond (BBBY) has had a rough go as of late, with lackluster financial results in the previous few fiscal quarters weighing down its stock price. The company also recently made headlines last month in a debacle involving GameStop (GME) chairman and activist investor Ryan Cohen, where he disclosed a 9.8% stake in the home goods retailer and added three individuals to Bed Bath’s board of directors.
And with Bed Bath & Beyond set to post fiscal Q4 2021 earnings on Wednesday, April 13, before market open, Loop Capital Managing Director Anthony Chukumba believes the outlook for the report seems bleak.
“I think [Bed Bath & Beyond’s earnings are] going to be very, very terrible,” Chukumba told Yahoo Finance Live. “I think that comparable store sales are probably down in the high single digits, maybe even low double digits. I think they had a very brutal holiday selling season.”
According to Chukumba, the company has lost a significant amount of market share and relevance to consumers. He said that Bed Bath & Beyond’s forward guidance will be imperative in gauging the outlook for the stock in the coming quarters.
“I think they had a very brutal holiday selling season,” he added. “Now one of the keys really is going to be their guidance for 2022 current consensus that they’re going on about 64 cents a share. I think that’s nonsensical. I’m at 25 cents a share. And quite frankly, I think there’s downsides to my estimate.”
Chukumba joined Yahoo Finance Live to discuss Bed Bath & Beyond earnings expectations as well as the outlook for GameStop following the company’s stock split announcement. Loop Capital is a Chicago-based, full-service investment bank, brokerage, and advisory firm that provides capital solutions for global corporate, governmental, and institutional entities.
Loop Capital maintains a price target of $10 and a rating of Sell for Bed Bath & Beyond’s stock. The company’s share price is down from a late March peak of over $27, but has otherwise traded relatively flat following mid-2021 highs. Shares are trading around $18 ahead of Wednesday’s earnings report.
Bloomberg consensus estimates forecast adjusted earnings per share of 4 cents, along with net sales of $1.83 billion. However, Chukumba thinks headwinds and corporate structuring uncertainties make for a difficult earnings beat. Cohen has expressed views that he believes it would be in Bed Bath & Beyond’s financial best interest to split children’s goods brand buybuy BABY from the company and sell the rest of Bed Bath to private equity sponsors.
“There’s this notion that this company can be taken private, that doesn’t make any sense,” Chukumba said. “It’s already way too levered, and the fundamentals are terrible, and interest rates are rising. So this notion that buybuy BABY is worth maybe more than the entire company — once again, I did a very detailed analysis of that — buybuy BABY is not worth anything close to the entire market cap of the company.”
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV
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