Bed Bath & Beyond earnings will feel the pressure of heavy discounting and light traffic, analysts say

Analysts say Bed Bath & Beyond Inc. could come under pressure from promotions and traffic pressures due to third-quarter results scheduled for Thursday.

“We saw a very significant spike in Bed Bath & Beyond promotions in F3Q and December, including a free Beyond + membership program (previously $ 29 fee) that offers customers free shipping and 20% off every purchase,” analysts wrote of Bank of America on a Tuesday note.

Analysts say shipping costs have also decreased and minimum purchase thresholds for delivery have been raised.

“We received a number of other oversized promotions, including a 25% discount on an entire BOPIS order (buy online, in-store pickup) and a 25% discount on an entire order with Klarna (which stacked with a 20% discount coupon for 40 could be). % Discount), “says the note.

Klarna is a buy-it-later service.

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“This particularly affects the management’s plan to move away from
Promotions. “

Bank of America rates Bed Bath & Beyond BBBY,
-1.15%
The stock performs worse, slashing its target price from $ 14 to $ 11.50.

Analysts also expressed concern about customer footfall.

“Black Friday sales were low despite a 25% discount on the entire sale,” said Bank of America.

Bank of America suspects that seasonal items arrived late and that much of them are left unsold on the sales floor on Christmas Eve.

“The ubiquitous 20% discount coupon remains a drug that Bed Bath & Beyond cannot get rid of,” Wedbush analysts wrote in a note.

Analysts say December promotions “stepped up” year over year, with store traffic slowing 5,000 basis points in the first three weeks of the month, which online sales won’t make up for.

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“While expectations are low, we see limited upside pressure as we expect revenue and profit losses and declines, as well as signs of additional loss of market share,” wrote analysts, headed by Seth Basham.

“Those drawbacks are unlikely to be offset by growth opportunities in baby and markets, as well as the potential for more aggressive stock buybacks.”

The Bed Bath & Beyond portfolio includes the homonymous chain of household goods stores Buy Buy Baby and Harmon.

Wedbush rates Bed Bath & Beyond stock as neutral with a price target of $ 14 down from $ 18.

Bed Bath & Beyond’s shares fell following the company’s second quarter financial report, with executives detailing a variety of issues, including an unexpected traffic slowdown and global supply chain challenges.

“[R]Relaxing and having a great vacation by November is our main focus, ”said CEO Mark Tritton at the time.

UBS is pessimistic for both the third and fourth quarters.

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“Looking ahead, the market is likely to need evidence that Bed Bath & Beyond can achieve positive results while managing its profitability in the face of declining industry demand and persistently high costs,” UBS wrote in an earnings preview.

“In our opinion, the 3Q results and the 4Q guide are unlikely to inspire confidence
This can be achieved in ’22, especially as the industry environment is becoming more difficult. “

Bed Bath & Beyond stock was down 3.2% on Tuesday trading and is down 18.6% in the past 12 months.

The benchmark index S&P 500 SPX,
+ 0.03%
increased by 29.6% last year.

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