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Our Home Furnishings index suggests BBBY’s 1Q12 comps should come in +6.5% vs. guidance of +2-4% and consensus expectations of +4.1% when the company reports after the close on Wednesday.

Over the past 12 quarters, BBBY comps have only missed consensus once (in 3Q11, by 40bps) despite coming in slightly above the high end of guidance (+4.1% vs. +2-4%). BBBY did not miss its own comp guidance once over that same time period and bucked the street by an average of 250bps over those 12 quarters. Mind you, however, that this coincided with the period during which it contributed to, and benefitted from the Bankruptcy of Linens ‘N Things.

Now, comp expectations are above the high end of BBBY’s standard +2-4% guidance at +4.1%, and as noted, our model suggests that we’ll see it.  But given our poor outlook for the company longer-term, we’d view any near-term strength as an opportunity to get out.

We see concern over the runway for omni-channel growth given BBBY’s e-commerce penetration has declined over the past 4 years with its exposure to the older spending group increasing. Of the nearly 100 companies we analyzed, BBBY was ranked 9th in terms of exposure to the 55 and up spending demographic which actually increased in 2011 relative to 2010. Finally, with a 93% direct product overlap with amazon.com, there is additional risk in transitioning current BBBY shoppers from in store to online without remaining vulnerable to attrition from AMZN- BBBY’s competitive advantage is its in store shopping experience, quite the opposite for AMZN.

HedgeyeRetail Visual: BBBY Comp Upside? - Home furnishings index

 

HedgeyeRetail Visual: BBBY Comp Upside? - BBBY comp guidance history