This time next month Bed Bath & Beyond will report its third quarter earnings and depending on how it goes the beleaguered retailer could be facing its next big crisis.
The company has not announced specifically when it will report, but analysts are expecting it to be Jan. 4 or 5 of the new year. And while the quarter will not include the majority of the Christmas selling season, covering the period approximately through the end of November, the results will be of critical interest to shareholders and investors who have been closely watching for signs of changes in the retailer’s fortunes.
Improvements in its revenues, or at least smaller declines, could give investors faith that management’s changes are starting to have a positive impact. But continued declines in sales and more losses could force it into further drastic measures, including potential bankruptcy.
So far the retailer has not issued any guidance on how the past three months went and there’s no reason to believe it will. Companies usually do not provide any interim information unless there are extraordinary circumstances – good or bad – they want to share in advance of its formal reporting. Retail in general has been underperforming this fall with many major retailers, from Walmart and Target to Macy’s, Kohl’s and online sellers all reporting lackluster sales in general merchandise categories.
And while there isn’t any reason to believe BBB will buck that trend, its news for the previous two quarters has been so dismal that it won’t take much to show improvements, modest though they will be.
Any upticks will come against reports that Bed Bath is struggling to get merchandise shipments. DataWeave, a research company, reported in late November that BBB was experiencing serious stock outages, according to Seeking Alpha, which wrote “that more than 40% of the specialty retailer’s products were out of stock in October.” It said some vendors were withholding shipments pending getting paid. BBB has said it is paying its suppliers on time and was working on its supply chain process.
Bed Bath has also initiated a number of financial moves to secure additional funds and lines of credit, mainly in the form of converting its debt into equity in the company. It says it has the necessary balance sheet to get it through until its performance begins to improve.
If indeed that is happening we should know a lot more the first week of January when BBB reports. The countdown is on.
WarrensReport 