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Guilfoyle: Bed Bath Beyond is Not for the Faint Hearted

But there's definitely a trade to be made after the retailer's latest results were punished.

Bed Bath & Beyond  (BBBY) - Get Bed Bath & Beyond Inc. Report continues to run into headwinds and the retailer’s second quarter results showed the immense impact that was caused by supply chain issues, inflation and weak consumer sentiment on its profit margin as the global pandemic drags on.

Shares of the heavily shorted retailer were punished after the latest report, falling more than 20% after the results.

Trading shares of BBBY is not for the faint-hearted, but investors could see some gains, Stephen “Sarge” Guilfoyle wrote in a recent Real Money Pro column. “Just to make a few bucks, baby,” he wrote. “I am not investing in BBBY, but I leave open the possibility. I am here solely with a mercenary heart to take away from the algo crowd who don't even know I lurk in their shadows. Ooh-freakin-Rah. Humans rule.”

Guilfoyle’s strategy is to wait for BBBY to reach $18 a share and then he plans to sell.

“I see $18 and I am outta here,” he wrote.

BBBY reported adjusted earnings of $0.04 per share and a GAAP loss of $0.72 per share, which both missed Wall Street expectations. Even revenue did not meet estimates at $1.95 billion, which was a steep decline of 26% from the comparable quarter one year ago.

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The retailer reported a net loss of $73 million and CEO Mark Tritton attributed the loss to several challenges, especially in “large, key states such as Florida, Texas, and California, which represent a substantial portion of our sales."

Retailers have faced a difficult environment since March 2020 and inflation is now becoming a larger factor.

"Furthermore, unprecedented supply chain challenges have been impacting the industry pervasively and we saw steeper cost inflation escalating by month, especially later in the quarter, beyond the significant increases that we had already anticipated,” Tritton said. This outpaced our plans to offset these headwinds."

The company did not increase its long-term debt and should not have any issues “in the near to medium term in meeting their obligations,” Guilfoyle wrote.

The stock is a favorite of short sellers - 45% of the entire float or over 22 million shares were in short positions as of Sept. 15. The average daily volume for Bed Bath & Beyond is 2.4 million shares.

But Guilfoyle remains a fan of the CEO, who has a "can do" mentality.

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