Will Bed Bath & Beyond Affect Home Goods ETFs? | ETF Trends

Bed Bath & Beyond Inc. is having a rough morning Wednesday, still down over 23% after the company’s decision to announce disappointing same-store sales figures well in advance of its fourth-quarter earnings release.

The home goods retailer’s shares tanked nearly 25% on Wednesday after the Bed Bath & Beyond Inc. stated following Tuesday’s close that December and January same-store sales dropped 5.4%.

“We are experiencing short-term pain in our efforts to stabilize the business, including the pressures of store traffic trends coupled with our own executional challenges,” CEO Mark Tritton said in a statement.

Wall Street analysts had been anticipating a drop of a more modest 3.97% for the fiscal fourth quarter, so this came as quite a shock ahead of earnings.

“I don’t even know why the hell they did that. They didn’t have guidance. Why revise guidance if you didn’t have guidance?” questioned CNBC’s Jim Cramer.

Although it is set to report full fourth-quarter numbers on April 15, Bed Bath & Beyond said in a statement it decided to announce the sales figures “to provide visibility into the current pressures on the business.”

Bed Bath & Beyond reached a 52-week low of $7.31 back on Aug. 15, after climbing to its highest level in the past 12 months on April 4, 2019, trading at $19.57. The stock is currently trading at roughly $11.40 as of noon EST on Wednesday.

The home goods retailer connected the declines to falling store traffic, inventory management issues and additional markdowns and promotions.

“Whatever advice he got from what lawyer, from the chairman, I think all those people need to be broomed and broomed yesterday,” Cramer said on “Squawk on the Street.”

Despite the torrid drop however, Cramer believes that this could be a buying opportunity for investors with an interest and available capital, saying, “I would buy it.”

Other analysts are less sanguine however.

“This represents a discouraging start to the Tritton era,” Wells Fargo analyst Zachary Fadem said. “And while it’s widely understood that a Bed Bath & Beyond turnaround would be no easy task, we believe it’s safe to say that [near-term] improvement appears increasingly unlikely at this point.”

While it is still unclear how the stock may affect home goods ETFs on a longer-term basisthe VanEck Vectors Retail ETF (RTH), the First Trust Consumer Discretionary AlphaDEX ETF (FXD), and the SPDR Series Trust SPDR Homebuilders ETF (XHB) are all potential beneficiaries of both positive and negative news for BBBY, given their healthy allocations of the stock, and investors who agree with Cramer might consider using those ETFs if looking to add the company to their portfolios.

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