Bed Bath & Beyond Plunges 21% After Slashing Sales Forecast on China Tariffs

Bed Bath and Beyond Inc. (BBBY) shares plunged Thursday after the struggling home retailer posted much-weaker-than-expected second quarter earnings and cited the impact of trade tariffs on China-made goods as it slashed its sales and profit target for the rest of the year.

BBBY fell 21% to close at $14.86 a share. The stock had been as low as $14.16 (-24.7%) earlier in the session and is now down some 33% for the year.

The company said same store sales fell 0.6% over the three months ending in August, well shy of the Street forecast of a 0.3% gain and the sixth consecutive decline, while net income slumped 46% from the same period last year to $48.6 million, or 36 cents a share, on sales of $2.94 billion. Bed Bath said its sees current quarter sales to fall in the "mid-single digit" range, and fourth quarter revenues to tumble in the "high single digit range" owing to both changes in its corporate calendar and "tariffs on imports from China."

"Regarding tariff, everything we know today about the impact on our business we've built into the back half. For us, our direct imports from China represent a relatively small number of business," CFO Robyn D'Elia told analysts on a conference call late Tuesday. "And we're just -- we're continuing to learn things through domestic vendors and we'll continue to learn about that into the future. And we're considering all of our options in terms of mitigation strategies. But again, it's all built into the model that we provided."

U.S. retailers have been sounding the alarm on the impact of President Donald Trump's decision to impose a 10% tariff on China made goods -- a figure that will rise to 25% at the beginning of next year -- and threaten levies on a further $267 billion worth of goods if Beijing doesn't make significant moves to reduce its record trade surplus with the United States.

Walmart (WMT) , the world's biggest retailer, added its name to a list of U.S. peers concerned over the tariff impact in a letter to U.S. Trade Representative Robert Lighthizer. "As the largest retailer in the United States and a major buyer of U.S. manufactured goods, we are very concerned about the impacts these tariffs would have on our business, our customers, our suppliers and the U.S. economy as a whole," Walmart said in the letter dated September 6.

Target Corp. (TGT) has said it was "deeply troubled" by the Administration's trade move, adding it was already seeing evidence of vendors raising prices to compensate. Home Depot Inc. (HD) CEO Craig Menear told the Goldman Sachs Global Retailing Conference earlier this month that, while his own company was managing well, "when you have tariffs do in place, some of that flows through to the customer."

(This story has been updated with closing stock prices.)

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