Bed Bath & Beyond's (BBWI) big comeback has hit a major snag

Bed Bath & Beyond's (BBWI) stock plunged nearly 25% on Thursday after the retailer reported an earnings miss, while also cutting its outlook for the rest of the year.

The company is projecting its fourth-quarter sales to fall somewhere in the high single digits. This would indicate that it is not expecting any substantial bump from holiday sales in December.

What makes this especially significant is that this outlook factors in November's Thanksgiving holiday in the United States and their Black Friday sales.

Of course, the influence of Amazon (AMZN) on the retail market has changed the strategy.

As many retailers struggle to keep up with the e-commerce giant's dominance, they've now extended their Black Friday sales for up to a week in order to drive up business. But that doesn't appear to be benefiting Bed Bath & Beyond this year.

In an interview with Barron's, CEO Daniel Heaf blamed part of the underperformance on "strategic missteps," but also pointed to economic concerns that have begun to spread across America.

“It’s driven by heightened concern around job stability, income disruption for government workers—and our customers have told us that they are waiting for bigger discounts and that they’re not as likely to spend on themselves,” he said.

Bed Bath & Beyond reported earnings of 35 cents a share for the fiscal 2026 third quarter, below analyst's estimates of 39 cents a share. The retailer also reported $1.59 billion in revenue for the quarter, below the consensus estimate of $1.63 billion.

The company is expecting its fiscal-year net sales to slide by low single digits, after having previously projected growth of 1.5% to 2.7%.

Morningstar: BBWI shares still 'severely undervalued' despite Q3 miss

Morningstar senior equity analyst Jaime M. Katz noted that Bed Bath & Beyond's projection of an 18% drop in earnings per share (EPS) for the fourth quarter is "signaling accelerating demand weakness during the holiday season, which generally represents around 40% of annual sales."

Katz pointed to the strategic missteps that Heaf said contributed to the company's earnings miss.

"The firm attributed the tepid sales to the lack of evolution in its offerings," she wrote. "While the rotation of products continued frequently, the inclusion of more relevant ingredients, updated packaging, and improved accessibility lagged consumer trends."

Heaf said that he is focusing on a turnaround plan that will include increased marketing, creating new products with more modern packaging and expanding its distribution strategy.

The chief executive is also looking to pursue operational efficiencies, with a goal of realizing $250 million in savings over the next two years. Katz notes that this is less than 5% of Bed Bath & Beyond's cost structure, which means the savings target "appears easily achievable."

The retailer filed for bankruptcy about two years ago and shuttered all of its physical stores. The company was reborn as Beyond, positioning itself as an e-commerce player that had major stakes in two blockchain firms: tZero, which provides digital solutions for issuers looking to tokenize their cap tables, and GrainChain, an ag-tech platform applying blockchain to agricultural supply chains.

However, the company announced in August that it was changing its name back to the original Bed Bath & Beyond and would also be opening brick-and-mortar stores across the US — but not in California.

Despite its earnings miss, Katz called bed Bath & Beyond's shares "severely undervalued."

The company's shares were priced at $15.82 following Thursday's rout.