BBBY reports 1Q15 results after market close on Wednesday, June 24th. Recall that I outlined the bear case in February, which has thus far largely played out. Here's what professional investors are expecting.

Pressured Sales Growth

BBBY comps have decelerated significantly since 2009, with comps going from high-single digits in 2009-2010 to low-single digits from 2011-2014. BBBY has suffered from share losses to other e-commerce and home furnishing companies. Expectations in 1Q15 are for comps of 2.5%, which would represent a continuation of the trend. Management's own guidance is for comps of 2% - 3%. 

We've also received an intraquarter datapoint from the government. The Census Bureau reports retail sales on a monthly basis, and their data suggests that home furnishing sales decelerated in the months that BBBY reports. This datapoint obviously doesn't predict Bed Bath and Beyond sales 100% of the time, but it's an incremental datapoint nonetheless.

All Eyes on Margins

Investors will be watching Bed Bath & Beyond's margin performance closely given its performance over the last several years.  Since 2Q12, operating margin has contracted for 12 consecutive quarters. 1Q15 is expected continue this trend. Both investor expectations and management guidance points to continued margin contraction driven by both gross margin contraction and SG&A deleverage. Importantly, investors will be watching gross margin to see if the contraction rate will abate from the 80-100 basis point decline rate seen over the last year. Recall that management noted that they will be cycling a change in their shipping thresholds, which should benefit their gross margin performance. However, the company has also relied heavily on promotions to drive traffic to stores. A key question will be whether their promotional levels more than offset the gross margin benefit they are expected to receive in the quarter.

EPS Expectations; Watch Guidance

Consensus stands at $0.94, and management's guidance calls for $0.90 - $0.95. The consensus estimate would represent just 1.8% earnings growth year-over-year. Importantly, investors will keep an eye on management's guidance for the year, which covered a wide range from flat to mid-single digit growth (or $5.07 - $5.42, if we assume 0% to 7% growth). Investors will be eager to see if they narrow the range, and which way they might narrow it (towards the low end or high end, for example). 

The financial model for BBBY can be accessed on my site. Additionally, look for an update when they report earnings.