- Telsey Advisory Group Analyst Cristina Fernandez has again confirmed an underperform rating Bed Bath & Beyond Inc BBBY and lowered the price target from $3.00 to $2.00.
- The analyst will focus on the traffic/sales trend over the past few months and during the holiday season.
- The analyst’s focus will also be on the company’s liquidity position and cash burn, pace of cost reductions, inventory position and progress on national brand merchandising initiatives.
- The analyst does not expect a major improvement in revenue trend in Q3 ’22 from that (26%) reported in Q2 ’22.
- also read: Bed Bath & Beyond is exploring strategic options including bankruptcy
- So far, Placer AI’s fourth-quarter traffic data shows 22 continued year-over-year declines with traffic at Bed Bath & Beyond (27%) in December, the analyst was quoted as saying.
- That recent stock offering and the debt swap gives Bed Bath & Beyond more time to adjust costs and rebalance its merchandise mix, Fernandez said.
- However, the analyst remains concerned about the extent of the sales and traffic declines and believes it will be difficult to win back consumers in a weaker economic climate, when consumers are spending less on their homes, and in a more competitive and promotional retail landscape.
- The analyst forecasts gross margin to decline 800 basis points year-on-year to 27.9% on lower comparable sales, supply chain costs and higher discounts for destocking, and SG&A expenses to decrease 800 basis points to 45.2%.
- Price promotion: BBBY shares are trading down 23.79% at $1.83 on the last check Thursday.
- Photo via Wikimedia Commons
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