Bed Bath & Beyond (BBBY) is up 3% premarket despite weak earnings guidance after the company reported better than expected fourth quarter earnings with positive comps and raised its dividend.
The home goods retailer reported better than expected earnings, with fourth quarter earnings per share of $1.84 versus $1.85 (adjusted) last year.
Same store sales grew 0.4%, in-line with estimates. The company reported negative comps in the second and third quarters of last year. For the fourth consecutive quarter, comparable sales from customer-facing digital channels grew in excess of 20% while comparable sales from stores declined in the low single-digit percentage range.
For fiscal 2018, BBBY guided for flat to positive comps, in-line with estimates. However, the company also guided for earnings to fall in the low single digit range to as much as 10%. Wall Street was looking for fiscal 2018 earnings to be slightly higher than the $4.58 per share reported in fiscal 2017.
Competition is pressuring margins as the company struggles to maintain sales.
Bed Bath and Beyond also raised its quarterly dividend 15% to $0.15. Investors are likely encouraged as it seems to be a better way to return capital to shareholders. The company bought back more than $1.6 billion in stock over the last two years. Almost entirely at higher prices than the stock is today.
The stock trades at 9x earnings. Meanwhile, ~8% of the float is sold short. The stock may find some resistance near the $39 and $40 levels.