Bed Bath & Beyond (BBBY -0.2%) will report first quarter (May) results after the bell (usually 4:15 PM ET) and host a call at 5:00 PM ET.
Shares of BBBY gapped down to a near ten-year low in April following disappointing fourth quarter results.
While same store sales came in modestly better than expected, profit margins continued to decline and the earnings outlook for fiscal 2019 came in well below expectations.
Fourth quarter same store sales (-0.6%) fell for the fourth consecutive quarter and for the sixth time in seven quarters. The company said sales growth was strong at digital channels but comparable store sales fell in the mid-single digit range.
Bed Bath & Beyond's profitability continues to deteriorate as sales stagnate in a very competitive home furnishings market. Operating margins feel 310 basis points to 9.1% in the fourth quarter. As a result, earnings fell 23% to $1.41/share.
Best Buy guided for a fiscal 2019 EPS in the low-to-mid $2.00 range, well below estimates, while low single digit same store sales guidance was slightly better than the less than 1% growth excepted by analysts.
Looking at first quarter expectations, EPS is expected to fall 40% on a slightly positive comp.
Despite the recent ecommerce acquisitions, it is unclear how the company will be able combat margin compression in the face of stagnant sales growth.
Investors are hoping that the stock will avoid gapping down for a fifth straight quarter following earnings. The stock has closed the gap down from last quarter's sell off as the retail has improved quite a bit.
With a $2.8 billion market cap, the stock trades at less than 9x EPS estimates. The enterprise value over EBITDA multiple is less than 5x.
Roughly 17% of the float is sold short. The options market implies a ~12% move in the stock by Friday's expiration.