Why Bed Bath & Beyond Stock Jumped This Week

What happened

shares of bed bath beyond (NASDAQ:BBBY) up 9.4% this week as of Thursday’s close, according to data from S&P Global Market Intelligence. Triggers were insider buying after last week’s earnings report.

Shares rose 9.3% on Thursday after rising 5.4% on Wednesday after filings showed several executives bought the stock.

A person looks at a pillow in a shop.

Image source: Getty Images.

so what

Insider buying is almost always a signal that the people who know the company best expect the stock to go up.

Filing, filed Tuesday night, revealed that four different executives bought shares in Bed Bath & Beyond. CFO Gustavo Arnal bought 15,000 shares; Chief Merchandising Officer Joseph Hartsig bought 5,000 shares; Chief Customer Officer Rafeh Masood bought 7,000 shares and Director Joshua Schechter bought 6,000 shares. The company also reported Thursday night that Chief Stores Officer Gregg Melnick bought 7,000 shares.

Such a spate of insider buying doesn’t appear to be coincidental, and these buying suggest that executives believe the stock has plenty of room to run after last week’s earnings report.

However, for the three months ended Nov. 27, Bed Bath & Beyond reported a sharp drop in sales, blaming supply chain issues. Total sales decreased 28% and sales from continuing operations decreased 14%, while comparable sales decreased 7%.

The company also reported a loss per share of $0.25 compared to earnings of $0.08 per share in the same quarter last year. The guidance was also uninspiring, as the company forecast another comparable sales decline in the current quarter and a full-year bottom line loss.

What now

Given the weak results, the rush of insider buying comes as a bit of a surprise. CEO Mark Tritton had said demand was strong during the quarter and executives appear optimistic given the ongoing trend reversal. However, the boom that retail stocks experienced due to the surge in demand for housewares at the start of the pandemic now appears to be fading.

This article represents the opinion of the author, who may disagree with the “official” endorsement position of a Motley Fool premium advisory service. We are colourful! Challenging an investing thesis — including one of our own — helps us all think critically about investing and make decisions that help us be smarter, happier, and wealthier.

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