Bed Bath & Beyond shares plunged Thursday after the retailer posted a 5% quarterly year-over-year sales decline, largely driven by sales of non-core assets like Cost Plus World Market and ongoing store closings of his larger turnaround plans.
The share fell by more than 11% in premarket trading.
Sales in the same store for the entire store, including Buy Buy Baby and Harmon Face Values, rose 2% and rose for the second straight quarter. Digital sales rose 77% year over year, driven by 94% online growth at Bed Bath’s namesake.
Many Americans were at home during the Covid pandemic, causing them to cook, clean, organize, and redecorate more. Home organization, kitchen food preparation, bedding, bathroom and interior decoration sales accounted for two-thirds of Bed Bath’s total sales for the quarter.
Here’s how Bed Bath & Beyond performed in the third quarter ended November 28th, compared to analyst expectations based on refinitive data:
- Adjusted earnings per share: 8 cents compared to 19 cents, expected
- Revenue: $ 2.62 billion versus $ 2.75 billion expected
For the three month period ended Nov. 28, Bed Bath recorded a net loss of $ 75.44 million, or 61 cents per share, compared to a loss of $ 38.55 million, or 31 cents per share, the previous year.
Excluding one-time charges of $ 86 million associated with asset sales, restructuring, and impairment charges, the company made 8 cents per share. That was below the 19 cents per share that analysts had expected.
Net sales decreased 5% from $ 2.76 billion a year ago to $ 2.62 billion. That was also below the $ 2.75 billion forecast by analysts.
Sales in the same store, where sales are tracked online and in Bed Bath stores that have been open for at least 12 months, increased 2% due to online demand from shoppers. Bed Bath announced it had 2.2 million new digital customers in the quarter, with 36% of its digital sales coming from stores. 16 percent of e-commerce purchases were picked up by customers in stores.
“By the time the election started and Covid started ramping up, customers had built the muscles and built their understanding of them [pick up] “Chief Executive Mark Tritton told CNBC in a telephone interview.” Week after week we have seen these rates rise exponentially this holiday season. “
With the big box retailer going through hundreds of store closings, it will likely take longer for Bed Bath’s turnaround plans to translate into sustained growth – growth beyond the boom seen during the pandemic. In July, the company announced that it intended to close around 200 locations – many of these Bed Bath stores – by 2022. More than 40 stores will currently be closed this year.
Bed Bath announced on Thursday that sales in the same store in the fourth quarter of the fiscal year should be roughly the same as last year. Net sales are expected to be double-digit lower, partly due to ongoing closings, the company said. According to Refinitiv, analysts had called for a 6% drop in sales.
Bed Bath set longer-term financial targets in October that sales in the same business should be “stable” in fiscal 2021 and grow in the low to mid-single digits through 2023. This outlook remains unchanged.
During the Covid crisis, the company also said it prioritized merchandising and marketing for consumer investments in their homes. Your efforts seem to be paying off. During the quarter it said it had gained market share in the beds category, with bathroom and kitchen trends improving based on data from the NPD group.
“We have a very different organization today than in 2019 and before,” said Tritton.
“When you think of 2020, we didn’t just weather the weather [Covid] storm and protect our customers and teams, we’ve reconstructed the return to growth strategy. We also sold five companies, “he said.” Now we can really double the further development of our Bed Bath & Beyond recreation. “
Starting this year, Bed Bath is launching more than 10 private label brands in the hope that these new options will help differentiate itself from competitors such as Walmart, Target and Amazon, all of whom have performed strongly during the pandemic.
On Thursday, Bed Bath said it was “confident it will continue to handle the Covid-associated headwinds resulting from lower retail traffic and increased shipping costs”.
The outlook assumes that the stores will not have to close due to government restrictions imposed by the health crisis.
Bed Bath & Beyond shares were up approximately 27% over the past 12 months as of Wednesday’s close of trading. The company has a market capitalization of $ 2.6 billion.
The full press release on the results can be found here.
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