Bed Bath & Beyond shares plummeted Thursday, after the retailer reported a 5% quarterly revenue decline from a year ago, which he said was largely due to the sale of non-core assets such as Cost Plus World Market and ongoing store closings that are part of his larger turnaround plans.
The stock fell more than 12% in premarket trading.
Same-store sales across the business, including Buy Buy Baby and Harmon Face Values, were up 2% and were up for the second consecutive quarter. Digital sales were up 77% from a year ago, driven by 94% online growth at Bed Bath’s namesake.
Many Americans stayed at home during the Covid pandemic, prompting them to cook, clean, organize and redecorate more. Sales of the home organization, kitchen food preparation, bedding, bathroom and interior furnishings accounted for two-thirds of Bed Bath’s total sales during the quarter, the company said.
Here’s how Bed Bath & Beyond fared during the third quarter ended November 28, compared to what analysts expected, based on data from Refinitiv:
- Adjusted earnings per share: 8 cents versus 19 cents, expected
- Revenue: $ 2.62 billion vs. $ 2.75 billion expected
For the three-month period ended November 28, Bed Bath reported a net loss of $ 75.44 million, or 61 cents a share, compared to a loss of $ 38.55 million, or 31 cents a share, a year earlier .
Excluding $ 86 million in one-time costs related to losses on asset sales, restructuring and impairment charges, the company earned 8 cents a share. That was less than the 19 cents a share that analysts had expected.
Net sales fell 5% from $ 2.76 billion a year ago to $ 2.62 billion. That also came out below the analyst predicted $ 2.75 billion.
In-store sales, which track sales online and in Bed Bath stores that have been open for at least 12 months, were up 2%, boosted by online demand from shoppers. Bed Bath said it gained 2.2 million new digital customers during the quarter, with 36% of its digital sales coming from stores. Sixteen percent of e-commerce purchases were picked up by customers in stores.
“Once the election started and Covid started to ramp up, customers had built the muscle and built the understanding of it [pick up] CEO Mark Tritton told CNBC in a telephone interview. Week after week, we saw these rates rise exponentially during the holiday season. “
With the big-box retailer going through hundreds of store closings, it will likely take more time for Bed Bath’s turnaround plans to translate into sustainable growth – growth that lasts longer than the boost it experienced during the pandemic. In July, the company said it plans to close about 200 locations – many of those Bed Bath stores – by 2022. Currently, more than 40 stores are closed this year.
Bed Bath announced on Thursday that sales at the same store during the fiscal fourth quarter should be roughly in line with last year’s period. Net sales are estimated at a double-digit percentage, due in part to ongoing closures, the company said. Analysts called for a 6% drop in sales, according to Refinitiv.
Bed Bath set longer-term financial targets in October calling for “stable” same-store sales in fiscal year 2021 and an increase in low to mid-single digits by 2023. Those outlooks remain unchanged.
During the Covid crisis, the company also said it has prioritized investments in merchandising and marketing for consumers in their homes. Her efforts seem to be paying off. During the quarter, it said it gained market share in the bedding category, with improved trends in bath and kitchen, using data from the NPD Group.
“We have a very different organization today from 2019 and earlier,” said Tritton.
“When you think about 2020, we don’t just have the [Covid] storms and keeping our customers and teams safe, we have rebuilt our growth strategy. We have also sold five companies, ”he said. Now we can really double the ongoing evolution of our Bed Bath & Beyond recovery. “
As of this year, Bed Bath is launching more than 10 private label brands, hoping that these new options will help set it apart from rivals like Walmart, Target and Amazon, all of which have delivered strong performances during the pandemic.
On Thursday, Bed Bath said it “is confident it will continue to deal with the Covid-related headwinds from less shopping traffic and rising shipping costs.”
The outlook assumes that stores will not have to close due to government restrictions stemming from the health crisis.
Shares of Bed Bath & Beyond are up about 27% over the past 12 months, as of Wednesday’s close. The company has a market capitalization of $ 2.6 billion.
Find the full earnings press release here.