Bed Bath & Beyond Inc. (BBBY.O) reported a better-than-expected full-year forecast, showing its turnaround plans are starting to pay off. That eases pressure on the company to cede to recent activist demands, but it’s not out of the woods yet as brick-and-mortar sales remain a challenge.

• The retailer sees its earnings per diluted share this fiscal year growing slightly to between US$2.06 and US$2.15 a share, beating the US$1.85 a share that analysts had been expecting.

KEY INSIGHTS

• A trio of activist investors -- Legion Partners Asset Management LLC, Macellum Advisors and Ancora Advisors LLC -- launched a campaign in March to remove Chief Executive Officer Steven Temares and replace the entire 12-person board. The company said its turnaround plan “accelerated” in the past year, which may strengthen its case to stay the course.
• The company said there are more shifts ahead. It plans to announce additional changes to the board, governance structure and compensation practices in the near future, it said -- though that may not be enough to satisfy the activists.
• Still, there are some signs of lingering challenges. Comparable sales, a closely watched measure in retail, fell 1.4 per cent. Analysts had forecast a decline of 1.3 per cent, according to Consensus Metrix. The retailer cited a stronger e-commerce business but a mid-single-digit percentage drop in in-store sales.

Market Reaction

• Bed Bath & Beyond shares initially surged in late trading in New York before paring gains. Shares were mostly unchanged as of 4:28 p.m. The stock, which jumped 22 per cent in March after activists disclosed their challenge, was the most shorted stock in the Russell 3000 on Tuesday afternoon ahead of the earnings release.
• Get more on the numbers here.