Shares of Bed Bath & Beyond (NASDAQ:BBBY) have fallen by about 50% in the past month as the company deals with internal management issues, layoffs and excess inventory. Earnings for the second quarter were announced this morning, with revenue coming in at $1.43 billion, falling short of the consensus analyst estimate of $1.47 billion. The loss of $366.2 million steepened significantly from a loss of $73.2 million a year ago. Excluding non-recurring costs, adjusted earnings per share (EPS) tallied in at a loss of $3.22 per share, while analysts were expecting a loss of $1.85.
Still, Q2 earnings do not include the impact of Bed Bath’s restructuring plan that was announced last month. As part of the plan, the company closed 150 “lower-producing” stores, laid off about 20% of its staff and received $500 million in financing from Sixth Street Partners.
In addition, interim CFO Lauren Crossen believes the company is making progress in clearing out inventory as the holiday season nears, explaining: “Of the owned brand inventory that we targeted and was comprised in our reserve, we’ve made headway in Q2 through about 1/3 of that inventory.”
As of the end of Q2, Bed Bath had $850 million of cash and cash equivalents on hand and used up $325 million during the quarter. UBS expects the retailer to use up $1.5 billion of cash during the next two years. This company will put the cash toward opening up new BuyBuy Baby stores and investing in nationally branded vendors.
It’s clear that Bed Bath is going through an extremely difficult period of time. However, the big question is whether these inefficiencies have already been baked into the price of BBBY stock. These five investors certainly think so.
5 Investors Betting Big on BBBY Stock
Tracking institutional ownership is important, as these large investors provide liquidity and price support for stocks. During Q2, 216 13F filers reported owning BBBY, a decline of 24 funds from the previous quarter. On top of that, none of the filers own BBBY in their top 10 positions. Meanwhile, the institutional put/call ratio sits at 0.74, down from 0.85 during the first quarter. This means that institutions own more call options against the company than put options. So, who are Bed Bath & Beyond’s top five shareholders?
- BlackRock (NYSE:BLK): 12.51 million shares. BlackRock sold 3.08 million shares during Q2.
- Vanguard: 7.93 million shares. Vanguard sold 2.22 million shares during Q2.
- State Street (NYSE:STT): 3.3 million shares. State Street sold 371,421 shares during Q2.
- Citadel Advisors: 2.3 million shares. Citadel purchased 2.26 million shares during Q2 and also owns call options against 2.87 million shares and put options against 1.73 million shares.
- Susquehanna International Group: 2.01 million shares. Susquehanna purchased 1.33 million shares during Q2 and owns call options against 2.48 million shares and put options against 3.31 million shares.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
