Yahoo Finance's Brad Smith joins the anchors to talk about Bed & Bath Beyond stock jumping despite missing Q3 earnings estimates, Walgreens stock soaring amid demand for COVID-19 vaccines, and Constellation Brands launching a new beverage.
I want to bring in Brad Smith and also want to welcome Brad Smith to Yahoo Finance. He joined us just a few days ago. So welcome, welcome, Brad, and what stands out to you about Bed, Bath, and Beyond? Because it certainly had quite a reversal in pre-market trading. It had been down by at least this much before reversing higher.
They also saw a comparable sales decline of about 7% versus the same quarter last year and a decline of 4% versus the two-year comparison, if we want to look back that far. And they also previously announced a slower start to sales in September and October. They did see a change in trends by November, though, perhaps some investors latching onto that. Comp decline improving in that particular month and particularly in stores as well.
And then they also cited an uptick in their Beyond Plus loyalty program. That actually grew by nearly a half a million members after one of their largest new subscriber quarters, and so keep a close eye on shares of Bed, Bath, and Beyond but absolutely jumping as of right now, intraday.
Their outlook, coming into this year, back in April of 2021, they were looking for adjusted operating profits of about $525 million. Right now on their full year guide, they're looking for $240 to $310 million. So you cam see how that business has become increasingly worse throughout the year.
They also teased down below in the earnings release potentially more store closures. They're smack in the middle of a 200-store closure campaign right now. So look for more store closures from this company.
And then also too also buried in the earnings release, destination categories. These are kitchen items, bathroom items, very key part of Bed Bath's business, 2/3 of their annual sales. Those comps down 13%. If you have been a Bed Bath bull, you do not like any of those things I just listed.
BRAD SMITH: I think if there's one thing that they do latch onto as well-- but we've seen in retail in the past, some of those store closures typically are looked at as a trimming of some of the overhead that a company may experience, especially if it's an underperforming location, and perhaps that gives them opportunity to send inventory elsewhere. We'll see if they do just that, but the store closures, perhaps an alleviation of some of that outgoing expenditure and that overhead that they have to pay on these. What we know are high square foot operating locations, and so with that in mind, we'll see if some of the trimming of that excess on the number of stores that they do have.
And then where they reposition the brand even further in some of those other partnerships that they have seen with the necessary companies to bring inventory into their locations, even as they had cited some of those supply chain constraints. Navigating exactly where those stores are seeing the inventories and seeing the levels actually hold up to par, I think that's something that investors are also going to have to keep a close eye on here going forward.
JULIE HYMAN: You guys, I would also point out, the stuff with Bed, Bath, and Beyond that has nothing to do with the fundamentals of the company. Right? Just as a reminder here, this is a stock that got memed. Right? It does have its retail adherents and supporters, and as we have seen with other meme stocks, sometimes what the numbers show has nothing to do with how the stock trades.
I would also further remind folks, there is very high short interest in this name. I'm looking at some figures that show it at about 23% of float. That's high, and so in other words, when you see a stock turn around, and then it really start to snowball to the upside-- I guess for lack of a better word-- really gain steam here, that can be short covering as well. Not saying that definitely is here, but it is a possibility.
Got to move on to another one of the stocks that we were watching, and that is Walgreens. Walgreens also coming out with its numbers. That company coming out no hidden positives here. It came out and beat estimates. Right? You can see here, sales and earnings per share beating estimates. Brad, I know you're taking a look at this one as well. The company getting a boost in part, administered an awful lot of COVID shots over the quarter.
BRAD SMITH: Yeah. That's exactly right, and I had a chance to listen in to this call this morning. And they had said that they administered 15.6 million COVID vaccines in the latest quarter. That brought its total to more than 56 million to date. Now, noteworthy here, of course, we had seen that actually peak in the third quarter of last year, administering 17 million shots, and so 6.5 million COVID tests, which we know are a hot ticket item right now, they saw that administered as well in the quarter.
And then noteworthy that they also brought up on the call the digital sales in the quarter. They're seeing a higher average order of $36 online versus $20 in store, and they saw 88% digital sales in the quarter. And so with that in mind, I think some of the growth in that category, as well as the new My Walgreens members, that was up by about 7.2 million, bringing that total to 92.4%.
And then additionally, some of the investments that they're making in VillageMD, tracking to hit 160 locations by the end of the year, I think that's going to give them more of that ability to spread out into all of the major investment categories, beyond just product and beyond just getting people in store. But that omnichannel approach, whether that be in how they're facilitating health care all the way into where they're creating additional touchpoints in your in-store visit or online to ensure that they're seeing some type of add on and tick up in the average ticket price that they're seeing out the door too.
BRIAN SOZZI: That's a real good point. The only thing I'll add here quickly on Walgreens, one thing that caught my attention was same-store sales in their beauty and personal care business really up strong, 16.6%. If you are trading the space, immediately you want to think of names like Coty, ELF beauty or Elf beauty, looks like cosmetics are coming back as more people go back out to various events, despite everything going on in the world.
Also, don't discount personal care items. I'm already starting to think about, because of this Walgreens quarter, perhaps P&G had a good quarter. Perhaps Kimberly Clark had a good quarter, in part because they have all raised prices.
BRAD SMITH: Yeah. That's right. Same store sales up 10.6%. Sorry.
JULIE HYMAN: Sorry, guys. I just wanted to sneak in constellation brands and not just because they're introducing a new Fresca branded--
JULIE HYMAN: Ah, I love it. Love it.
JULIE HYMAN: Ready-to-drink cocktails. That's the lead to me. Although, I don't think I've had a Fresca in 20 years. I don't know.
BRIAN SOZZI: You're missing out. You're missing out.
JULIE HYMAN: The stock's not changed much here this morning, even though it looks like earnings per share beat by a relatively wide margin here. You know, Soz, you want to kick off this one, and then we'll kick it over to Brad?
BRIAN SOZZI: I'll just comment, because clearly, I'm very fired up about this Fresca. This is the continued, I would say, of beverage and beer makers or alcohol makers starting to join forces. In addition, Fresca is coming into market a new ready-to-drink drink, teaming up with Coca-Cola.
Now, keep in mind, Coca-Cola has also recently signed a deal with Molson-Coors to launch Topo Chico hard seltzer. That has been in the mark for I believe about seven or eight months, and then PepsiCo recently signed a deal with Sam Adams for hard Mountain Dew. That is a hard seltzer. That is going to start hitting shelves in the coming weeks. So it's just fascinating to see these two industries that have long not worked together, for the most part, start to join forces and try to drive growth.
BRAD SMITH: Yeah, and it's a major partnership from a company that has already had to mark down some of their investments in one of their other hopeful growth strategies and canopy, which we've been tracking as well. We do know that in Constellation, they recognized that $424 million unrealized net loss at this point in time in the initial-- or since the initial canopy investment. That was back in November of 2017, but you think about some of their best performing categories, and it still does come down to the beer business.
They saw modest growth, 4% growth in the beer business compared to the same quarter last year, and they're expecting 10% to 11% net sales growth and 6% to 7% operating income growth for fiscal 2022, this year. They also saw some modest growth in the wine and spirits business. That was driven by Prisoner brand, Kim Crawford, and Meiomi expecting fiscal year net growth there for the sales of about 4% to 6%, but for this most recent quarter, compared year over year, 3% growth on that category.
JULIE HYMAN: Brad Smith, thank you so much. Very comprehensive stuff on all of these earnings reports, really appreciate.