Margins of Bed Bath & Beyond suffer from the use of coupons to compete with Amazon

Bed Bath & Beyond Inc. is struggling to compete with Amazon.com Inc. for no-coupon pricing and other discounts, which hurt its margins, according to Wedbush analysts.

Shares of the home furnishings and household goods retailer dropped more than 23% on Thursday after posting earnings and sales that missed the second-quarter forecast.

The company is at the heart of a turnaround and modernization program that includes optimizing the supply chain and renovating the stores. According to a FactSet transcript, many of the company leaders' remarks on the earnings call focused on updates to these initiatives.

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Despite these details, many analysts point out that Bed Bath & Beyond

BBBY, -21.37%

is struggling to compete with other retailers on many fronts.

"Our price analysis indicates a growing price gap with Amazon

AMZN, + 2.06%

, with attractive prices only taking into account discounts of 20% and more on coupons or the loyalty program Beyond +, suggesting that the pressure on margins will persist when the company develops its loyalty program Basham.

Bed Bath & Beyond's compensation rates are neutral and their price target is reduced from $ 18 to $ 15.

J.P. Morgan's analysts agree that the pressure will be to continue the critical buying season.

"A bigger picture, as we believe that Bed Bath & Beyond has not been able to release positive results during the last holiday season despite a solid consumer context (best vacation since 2005)", seems difficult.

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Bed Bath & Beyond experienced a decline in same-store sales of 0.6% in the second quarter.

J.P. Morgan estimates that Bed Bath & Beyond's shares are underweighted with a price target of $ 14 against $ 16.

While competition is a problem, analysts thought Bed Bath & Beyond would benefit from the liquidation of Toys "R" Us. Bed Bath & Beyond also operates Buy Buy Baby Inc., World Market and Harmon, among others. distribution chains.

"Sequentially, trends remained stable over one year, but slowed over two and three years, which is particularly disappointing given the stronger consumer environment and the collapse of Toys" R "Us in the baby market. According to our estimates, Bradley Thomas, an analyst at Keybanc Capital Markets.

He points out that the company's gross margin has decreased over 26 consecutive quarters, a trend that he believes will continue.

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KeyBanc notes an underweight in Bed Bath & Beyond shares with a price target of $ 15, a decrease of $ 1.

Wells Fargo analysts are pessimistic about all the problems in society.

"With the benefits of Toys & # 39; R 'Us closures, a strong consumer environment and a host of ambitious corporate initiatives that have not materialized so far, we remain bearish in 2018.

Rates of Wells Fargo The shares of Bed Bath & Beyond underperform with a price target of $ 14, down $ 16.

Shares of Bed Bath & Beyond have fallen more than 34% in 2018, while the S & P 500 Index

SPX, + 0.55%

gained 9.4% over the period, the SPDR S & P Retail ETF

XRT -0.08%

up 14.1% and the Amplify Online Retail ETF

J & # 39; BUY, + 0.31%

increased by 28%.