Bed Bath & Beyond (BBBY) reports Q3 2021 earnings miss

Bed Bath & Beyond delivered disappointing fiscal third-quarter results on Thursday, with earnings and sales missing analysts’ expectations, prompting the home goods retailer to slash its outlook for the full year.

Shares initially dove more than 9% in premarket trading on the news but quickly erased those losses, closing the day up nearly 8%.

Bed Bath has been drawn into meme-stock rallies in the past. Last year, retail investors poured into names including GameStop and AMC Entertainment, sending these stocks on turbulent rides throughout the year. And as retail investors scooped up these stocks, short sellers were forced to dive in to cover their losses, driving the stock price even higher. This was likely a factor in Thursday’s stock move, as Bed Bath shares rose despite discouraging guidance.

Bed Bath remains among the most heavily shorted stocks, with about 22% of its shares available for trading sold short. Short sellers, which can include hedge funds, borrow a company’s shares in the hopes of buying it back at a lower price later, and pocketing the difference.

Bed Bath’s stock is trading in heavy volume, too. As of market, close nearly 32 million shares had changed hands. Over the past 10-days, the average daily volume for Bed Bath shares is 5.5 million.

The retailer faces big challenges ahead as it works to turn around its business. Chief Executive Officer Mark Tritton has laid out a plan to revamp stores, add private label products and close underperforming locations. It’s also launched an online marketplace to work with third-party sellers and compete with the likes of Amazon and Walmart.

But in the latest quarter, Bed Bath’s progress was held back by a lack of inventory due to supply chain bottlenecks that cost it about $100 million, Tritton said. Issues escalated during December, he said, despite strong consumer demand in its stores and online during the holidays.

The company also said it cut back its promotional mailers too drastically, which hurt sales as the flyers can draw people into stores. Limited paper supply from vendors limited the number of circulars it could send to potential customers, it said.

Here’s how the retailer did in the three-month period ended Nov. 27 compared with what analysts were anticipating, using Refinitiv data:

• Loss per share: 25 cents vs. breakeven results expected
• Revenue: $1.88 billion vs. $1.95 billion expected

The company’s net loss grew to $276 million, or $2.78 per share, from a loss of $75 million, or 61 cents a share, a year earlier. Excluding one-time items, it lost 25 cents a share. Analysts surveyed by Refinitv had expected it to breakeven.

Sales fell 28% to $1.88 billion from $2.62 billion a year earlier. That missed estimates for $1.95 billion. The company noted that some of the declines were due to planned…