BBBY provides Q1 guidance
BBBY sees Q1 EPS of 36c-38c versus consensus of 39c. Sees Q1 same store sales up 1.6%
BBBY Bearishness on Bed Bath: Beyond a profit warning - WSJ (38.27 )
The Wall Street Journal reports even though shares of Bed Bath & Beyond (BBBY) now are more reasonably priced and might even attract attention from leveraged-buyout specialists after its first-ever profit warning, some say investors should remain on the sidelines, amid a housing slump and worries about the health of the consumer. Just as important, Bed Bath's stores are aging and some longtime fans have been turned off by recent moves, suggesting that Bed Bath may have its work cut out. "The valuation isn't compelling ... its growth has slowed, its margins contracted during the last five quarters, and now [sales increases at Bed Bath stores open at least a year] are slipping," says Colin McGranahan, an analyst with Sanford C. Bernstein & Co., who has the equivalent of a "hold" rating on the stock. "As a much more mature company, they are more subject to cyclicality, and that isn't a great story unless the stock is cheaper than it is," he says. There are indications that Bed Bath's historically juicy profit margins -- 14% in 2006 -- may be challenged by competitors, such as closely held Linens 'n Things, which has been cutting prices amid its own sales decline. Another reason for bearishness: The co's stores are getting older and are about at the point where money is needed to update them, argues Stephen Long, a portfolio manager at Hanover Square Capital, which has been betting against Bed Bath in recent months. "Growth is falling; that suggests to us that the core concept is very mature," Mr. Long says. "The stock will drift down to $33 as growth investors" bail out of the stock and are replaced by value-oriented investors.
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