Bed Bath & Beyond’s stock plummeted on Thursday after the retailer reported a 5% drop in quarterly sales from the previous year, which he said was largely due to the sale of non-core assets like Cost Plus World Market and the closing of stores that are part of its larger recovery plans.
Shares fell more than 12% in pre-market trading.
Same store sales across its entire business, which includes Buy Buy Baby and Harmon Face Values, increased 2%, rising for the second consecutive quarter. Digital sales increased 77% over the previous year, driven by the 94% online growth in the eponymous Bed Bath banner.
Many Americans stayed at home during the Covid pandemic, which led them to cook, clean, organize and redecorate more. Sales of housekeeping, cooking food, bedding, bath and interior decor accounted for two-thirds of Bed Bath’s total sales during the quarter, the company said.
See 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 vs. 19 cents, expected
- Revenue: $ 2.62 billion versus $ 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 per share, compared to a loss of $ 38.55 million, or 31 cents per share, a year before.
Excluding $ 86 million in one-time expenses linked to losses on asset sales, restructuring and depreciation expenses, the company earned 8 cents per share. That was below the 19 cents per share analysts had expected.
Net sales fell 5% to $ 2.62 billion, from $ 2.76 billion a year ago. The figure was also below analysts’ $ 2.75 billion forecast.
Same store sales, which track online sales and Bed Bath stores open at least 12 months ago, increased by 2%, driven by online consumer demand. Bed Bath said it gained 2.2 million new digital customers during the quarter, with 36% of its digital sales made by stores. Sixteen percent of e-commerce purchases were made by customers in stores, he said.
“After the election started and Covid started to rise, customers gained strength and understood [pick up] “Chief Executive Mark Tritton told CNBC in a telephone interview.” Week after week this holiday season, we’ve seen these rates increase exponentially. “
As the large retailer works through hundreds of store closings, however, it is likely to take longer for Bed Bath’s recovery plans to translate into sustainable growth – growth that lasts beyond the momentum it experienced during the pandemic. In July, the company said it intended to close about 200 stores – many of these Bed Bath stores – by 2022. Currently, it is in the process of closing more than 40 stores this year.
Bed Bath announced on Thursday that it is requesting same-store sales during the fourth fiscal quarter to be almost in line with the prior year period. Net sales are estimated to be lower by a double-digit percentage, due in part to ongoing closings, the company said. Analysts had been asking for a 6% drop in sales, according to Refinitiv.
Bed Bath set long-term financial goals in October, requiring same-store sales to be “stable” in fiscal year 2021, and rising in the low to medium digits until 2023. That outlook remains unchanged.
During the Covid crisis, the company also said that it prioritized merchandising and marketing for consumers’ investments in their homes. Your efforts seem to be paying off. In the quarter, he informed that he gained market share in the category of beds, with improvement trends in the bathroom and kitchen, citing data from the NPD Group.
“We have a very different organization today than we did in 2019 and before,” said Tritton.
“If you think about 2020, we not only resist the [Covid] storm and keep our customers and our teams safe, we rebuilt the strategy to return to growth. We also sold five companies, “he said.” Now we can really double the continuous evolution of our Bed Bath & Beyond recovery. “
As of this year, Bed Bath is launching more than 10 private labels, with the hope that these new options will help differentiate it from rivals like Walmart, Target and Amazon, which performed strongly during the pandemic.
On Thursday, Bed Bath said it “feels confident in continuing to deal with Covid-related headwinds resulting from less store traffic and increases in shipping costs”
His outlook assumes that his stores will not be forced to close due to government restrictions caused by the health crisis.
Bed Bath & Beyond’s shares have risen about 27% in the past 12 months at the close of Wednesday. The company has a market value of US $ 2.6 billion.
Find the full press release on earnings here.