Bed Bath & Beyond shares drop as retailer’s earnings fall quick; store closures, divestitures weigh on sales

Bed Bath & Beyond shares tumbled Thursday, after the retailer reported a quarterly sales decline of 5% from a yr in the past, which it mentioned was largely because of the sale of non-core belongings like Cost Plus World Market and ongoing store closures which are a part of its larger turnaround plans.

The inventory was down greater than 12% in premarket buying and selling.

Same-store sales for its total enterprise, which incorporates Buy Buy Baby and Harmon Face Values, rose 2%, climbing for the second consecutive quarter. Digital sales soared 77% from a yr in the past, fueled by on-line progress of 94% at Bed Bath’s namesake banner.

Many Americans have been staying at dwelling through the Covid pandemic, prompting them to do extra cooking, cleansing, organizing and redecorating. Sales of dwelling group, kitchen meals prep, bedding, bathtub and indoor decor represented two-thirds of Bed Bath’s whole sales through the quarter, the corporate mentioned.

Here’s how Bed Bath & Beyond did throughout its third quarter ended Nov. 28, in contrast with what analysts have been anticipating, based mostly on Refinitiv information:

  • Adjusted earnings per share: eight cents vs. 19 cents, anticipated
  • Revenue: $2.62 billion vs. $2.75 billion, anticipated

For the three-month interval ended Nov. 28, Bed Bath reported a internet lack of $75.44 million, or 61 cents per share, in contrast with a lack of $38.55 million, or 31 cents a share, a yr earlier.

Excluding $86 million in one-time expenses tied to losses on asset sales, restructuring and impairment expenses, the corporate earned eight cents a share. That was beneath the 19 cents per share that analysts have been anticipating.

Net sales fell 5% to $2.62 billion from $2.76 billion a yr in the past. That additionally got here in beneath the $2.75 billion forecast by analysts.

Same-store sales, which monitor sales on-line and at Bed Bath shops open for at the very least 12 months, have been up 2%, boosted by on-line demand from consumers. Bed Bath mentioned it gained 2.2 million new digital prospects through the quarter, with 36% of its digital sales fulfilled by shops. Sixteen p.c of e-commerce purchases have been picked up by prospects in shops, it mentioned.

“Once the election kicked in and and Covid started ramping up, customers had built the muscle and built the understanding of those [pick up] services, and quickly pivoted into them,” Chief Executive Mark Tritton advised CNBC in a telephone interview. “Week by week this holiday season, we saw those rates increasing exponentially.”

As the big-box retailer works by way of a whole bunch of store closures, nonetheless, it is probably going to take extra time for Bed Bath’s turnaround plans to translate into sustainable progress — progress that lasts past the enhance it has skilled through the pandemic. In July, the corporate mentioned it was aiming to close roughly 200 areas — lots of these Bed Bath shops — by 2022. It’s presently within the technique of closing greater than 40 shops this yr.

Bed Bath introduced Thursday it is calling for same-store sales throughout its fiscal fourth quarter to be about consistent with the prior-year interval. Net sales are estimated to be decrease by a double-digit share, due partially to ongoing closures, the corporate mentioned. Analysts had been calling for a 6% drop in sales, in accordance with Refinitiv.

Bed Bath laid out longer-term monetary targets in October calling for same-store sales to be “stable” in fiscal 2021, and rising within the low-to-mid single digits by 2023. That outlook stays unchanged.

During the Covid disaster, the corporate additionally mentioned it has been prioritizing merchandising and advertising and marketing to shoppers investments of their houses. Its efforts look like paying off. During the quarter, it mentioned it gained market share within the mattress class, with enhancing traits in bathtub and kitchen, citing information from the NPD Group.

“We have a very different organization today than we did in 2019 and prior,” Tritton mentioned.

“If you think about 2020, not only did we weather the [Covid] storm and keep our customers and our teams safe, we reconstructed the strategy to return to growth. We also sold five companies,” he mentioned. “Now we can really double down on the continuing evolution of our Bed Bath & Beyond recovery.”

Starting this yr, Bed Bath is launching greater than 10 private-label manufacturers, with the hope that these new choices will assist set it other than rivals like Walmart, Target and Amazon, which have all had robust efficiency through the pandemic.

On Thursday, Bed Bath mentioned it “feels confident in continuing to deal with the Covid-related headwinds resulting from lower store traffic and increases in shipping costs.”

Its outlook assumes its shops will not be required to shut as a result of authorities restrictions introduced on by the well being disaster.

Bed Bath & Beyond shares are up about 27% over the previous 12 months, as of Wednesday’s shut. The firm has a market cap of $2.6 billion.

Find the complete earnings press launch right here.

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Written by Business Boy


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