Why Bed Bath & Beyond Stock Tumbled Today

What happened

Shares of Bed Bath & Beyond (NASDAQ: BBBY) carved out a new 52-week low on Thursday after the retailer reported disappointing second-quarter results. A slump in comparable sales despite a strong consumer environment, a steep drop in earnings, and reduced full-year guidance sent the stock 22.5% lower by 12:15 p.m. EDT.

So what

Bed Bath & Beyond reported second-quarter revenue of $2.935 billion, flat compared to the second quarter of 2017 and about $20 million below the average analyst estimate. Comparable sales declined by 0.6%, with growth in online sales more than offset by a mid-single-digit sales decline in stores.

Earnings per share came in at $0.36, down from $0.67 in the prior-year period and $0.14 below what analysts were expecting. Gross margin dropped 2.7 percentage points year over year to 33.7%, while operating expenses edged up. Operating income tumbled by 53%.

Now what

Bed Bath & Beyond now expects its full-year comparable sales to be roughly flat compared to last year, a slight reduction from its previous outlook. The company also now sees its full-year earnings per share at roughly $2, the low end of its previous range.

Bed Bath & Beyond still expects to slow down the declines in operating profit and earnings per share through fiscal 2019 and to return to earnings-per-share growth by fiscal 2020. But with the stock now trading for around 7 times the company's new full-year earnings guidance, the market just doesn't buy it.

10 stocks we like better than Bed Bath & BeyondWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Bed Bath & Beyond wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.