Bed Bath & Beyond said Thursday that sales fell 28% in the second fiscal quarter as the home goods retailer struggled to attract customers.
Shares rebounded in premarket trading as investors assessed the report. Shares of the company have been volatile, fueled in part by the meme stock frenzy as well as drastic changes to its business.
The company reiterated its full-year outlook, saying it expected comparable sales to decline about 20% as its business improves in the second half of the fiscal year.
Here’s how the retailer fared in the three-month period ending August 27 compared to what analysts expected, based on Refinitiv data:
- Loss per share: $3.22 adjusted vs. $1.85 expected
- Revenue: $1.44 billion vs $1.47 billion expected
The company’s net loss widened significantly to $366 million, or $4.59 per share, from $73 million, or 72 cents per share, a year earlier. Its net sales fell $1.99 billion from a year ago.
Comparable sales fell 26% in the second quarter. The primary retail metric, often referred to as same-store sales, is a year-over-year comparison of online sales and sales at stores that have operated for a full twelve months after an open period of about six to eight weeks.
One of the highlights of Bed Bath’s business, Buybuy Baby, also saw a sharp decline in the quarter. Its same-store sales declined in teens compared to growth in teens in the prior year quarter.
The quarterly report does not reflect the company’s latest turnaround plan. In late August, it announced plans to shake up its merchandising strategy and bolster its namesake stores and baby chain, Buybuy Baby. He also announced cost-cutting measures, including layoffs and the closure of around 150 Bed Bath & Beyond stores.
Read more: Here is a map of Bed Bath & Beyond store closures
Acting CEO Sue Gove said in a press release Thursday that the company is addressing inventory issues by accelerating markdowns for certain merchandise. She said Bed Bath is “confident that our current liquidity will allow for the necessary changes we are implementing”.
Gove said the company’s loyalty program, Welcome Rewards, has grown by more than 1.3 million since late August, bringing it to a total of 6.4 million members since its launch this summer. She said it reduced costs by about $250 million for the second half of the fiscal year as it worked to increase sales.
Bed Bath faces several significant challenges, including growing debt, vacant management positions and strained supplier relationships. As the company prepares for the crucial holiday season, it is being led by Acting CEO Gove and Acting Chief Financial Officer Laura Crossen. Its board expelled former CEO Mark Tritton in June and chief financial officer Gustavo Arnal committed suicide in early September.
In late August, Bed Bath got some relief as it secured more than $500 million in new funding, including a $375 million loan.
Bed Bath’s liquidity is $850 million after redemptions and borrowings that took place before the start of the second quarter, the company said Thursday.
The coming months will test whether the retailer can secure hot holiday items and popular national brands, which are central to its latest strategy. According to former company executives, Bed Bath has had strained relations with suppliers – and could face a repeat of two Christmases before, when it lacked several hot products from well-known national brands.
In a press release, Gove said working with Bed Bath suppliers had “been a significant area of focus” and said its debt and commitments to them “are significantly healthier than in the prior quarter”.
As of Wednesday’s market close, shares of Bed Bath are down about 56% so far this year. The company’s market value is $516.5 million.
Read the company’s earnings release here.
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