Bed Bath & Beyond reported substantial declines in sales across the business in the most recent quarter, blaming continuing problems with inventory and supply chains.
The home goods retailer said ecommerce sales at both Bed Bath & Beyond and its Buybuy Baby unit declined 18% from a year earlier. That’s a worse performance than seen in the brick-and-mortar operations, where comparable store sales dropped 8%.
Total net sales for the fiscal fourth quarter ending Feb. 26, 2022, dropped 22% to $2.05 billion from the $2.62 billion seen a year earlier.
Same-store sales fell 12% across the business compared with a year ago. They dropped 8% compared to the fiscal 2019 fourth quarter. Same-store sales fell 15% for the Bed Bath & Beyond banner and rose by low single-digits for the Buybuy Baby banner.
But that relatively positive performance from Buybuy Baby didn’t include ecommerce, where the company reported a mid-single digit decline in digital from a year earlier. The omnichannel retailer does not release dollar figures for ecommerce sales. Bed Bath & Beyond had web sales of $2.9 billion in 2021 and $3.5 billion in 2020, according to Digital Commerce 360 estimates.
“We are not pleased at all with our short-term results,” Gustavo Arnal, executive vice president and chief financial officer, told analysts on the earnings call April 13.
Arnal cited rising costs for transportation for the poor performance.
“Shipping cost increases were significantly higher than expected,” he said, “as container rates and inbound freight rates moved unpredictably higher in late January and February.”
The retailer said its gross margin for the quarter was just 28.3%. That’s a decline of 400 basis points versus Q4 2020 primarily due to product cost increases.
CEO Mark Tritton said out-of-stock merchandise caused the company to miss about $175 million in fiscal fourth-quarter sales.
That caught the attention of industry observers who say Bed Bath & Beyond needs to change its online performance quickly.
“If Bed Bath and Beyond expects supply chain conditions to ease in the second half of the fiscal year and turn the tide, it is critical that their online storefronts are poised to maximize the opportunity. The remodeling strategy for in-store experiences must also translate into optimizations to their website that ensure customers are able to find the inspiration and products they are looking for — and then some,” Suzi Tripp, vice president of insights at customer experience consultancy Brooks Bell, told Digital Commerce 360.
Swiftly Chief Technology Officer Sean Turner echoed that sentiment. Swiftly makes delivery and customer-service tools for retailers.
“It’s no surprise that supply chain issues and inflation continue to be a challenge for retailers,” he told Digital Commerce 360. “With inventory at a premium, retailers need to invest in tools that allow them to show shoppers what’s currently available and even on sale in their store to maximize customer satisfaction and revenue.”
The earnings report is the first from Bed Bath & Beyond since activist investor Ryan Cohen took a stake in the retailer. Cohen is the billionaire co-founder of pet-supplies retailer Chewy Inc., which is owned by PetSmart Inc., No. 13 in the Top 1000. Investors in so-called meme stocks follow Cohen’s investment activities closely.
Neil Saunders, managing director of GlobalData Retail, took to Twitter after the earnings release and called the results “absolute carnage.”
Bed Bath & Beyond’s results are absolute carnage. Sales down 22% in total, 12% on a comparable basis is abysmal. All the more so because the homewares market grew strongly. Who knew that being a meme stock and copying Target’s playbook doesn’t guarantee success?!#BedBathBeyond
— Neil Saunders (@NeilRetail) April 13, 2022
For the quarter ended Feb. 26, Bed Bath & Beyond reported:
- Net sales of $2.05 billion, a 27.8% drop from $2.62 billion a year earlier
- A net loss of $159.1 million, a substantial swing from $9.1 million net profit a year earlier
- An operating loss of $165.5 million, a widening of 598% from the $23.7 million operating loss a year earlier.
For the 12 months ended Feb. 26, Bed Bath & Beyond reported:
- Net sales of $7.86 billion, a drop of 14.8% from $9.23 billion a year earlier.
- A net loss of $559.6 million, a 73.1% widening from the net loss of $150.8 million a year earlier.
- An operating loss of $407.6 million, a 21% widening from the $336.9 million net loss a year earlier.
Percentage changes may not align exactly with dollar figures due to rounding.
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