Bed Bath & Beyond (BBBY) earnings for Q4 2021

Bed Bath and Beyond’s shares fell on Wednesday as the home goods retailer reported a loss in the holiday quarter, talking about low-inventory issues and congested ports and warning that consumer demand is declining.

CEO Mark Tritton said sold-out merchandise caused the company to miss out on about $ 175 million in financial sales in the fourth quarter. That’s higher than the previous quarter, when supply chain bottlenecks cost the company about $ 100 million.

Tritton said in a CNBC interview that the home goods retailer is disappointed with the results. He said “major headwinds in the macro environment” have slowed the company’s efforts to return.

For example, he said, moving goods costs more, and some best-selling goods from national brands are in short supply due to missing components, such as microchips that go into vacuum. Plus, he said, most of its seasonal goods were stranded in ports and arrived late.

At a conference call following the company’s earnings report, Chief Financial Officer Gustavo Arnal said the challenges remain in the first quarter. He said consumers are feeling increasing uncertainty, leading to a decline in demand. So far in the first quarter, he said sales at the same store have fallen by about 20% – a deeper fall than the previous three months.

Bed Bath did not deliver a specific forecast on Wednesday, but said it expects sales and margins to improve in the second half of the coming fiscal year as supply chain conditions ease.

Here’s how the trader fared in the three-month period ending Feb. 26, compared to what analysts expected, based on Refinitive data:

  • Tab pr. share: 92 cents against expected profit of 3 cents
  • Revenue: $ 2.05 billion versus expected $ 2.07 billion

The company’s net loss grew to $ 159 million, or $ 1.79 per share, from a net income of $ 9 million, or 8 cents per share. share, one year earlier. Excluding non-recurring items, it lost 92 øre pr. shares. Analysts surveyed by Refinitiv had expected earnings per share. share of 3 cents.

Sales fell 22% to $ 2.05 billion from $ 2.62 billion a year earlier. It fell below estimates of $ 2.07 billion.

Sales in the same store, which is an important retail target, fell 12% across Bed Bath’s business compared to the same period last year. Same-store sales fell 15% for the Bed Bath & Beyond banner and grew by low single digits for the BuyBuy Baby banner.

Digital sales fell by 18% compared to the same period last year, partly reflecting the shift back to stores and the normalization of e-commerce levels.

An uneven ride

Bed Bath has been on a bumpy ride as Target veteran Tritton has sought to refresh the retailer’s brand with the launch of private label products, store renovations and closures of underperforming locations. Its stock has been pulled into meme-stock rallies along with AMC Entertainment and GameStop.

As of Tuesday’s close, Bed Bath’s shares had risen about 23% so far this year, well ahead of the retail industry and the wider market. The dealer’s stock closed at $ 17.97 Tuesday, a decrease of 6.75%, bringing the market value up to 1.73 billion.

The retailer has also been under pressure from investors – including activist Ryan Cohen, chairman of GameStop and founder of Chewy.

The dealer recently entered into an agreement with Cohen’s company, RC Ventures, by agreeing to add new board members and investigating whether to divest or sell its BuyBuy Baby business, which has been one of its bright spots.

Still, Tritton said Bed Bath is making progress with its transformation. He said it is investing in technology, welcoming customers back with postcards and targeted emails, and expanding its more profitable private label business.

He said Bed Bath is undergoing a complete overhaul of its supply chain so that it can better manage all of its goods as it imports goods and moves them to distribution centers and stores. He said technology that acts as “a virtual control tower,” will go live by the end of this month. The company is adding more regional distribution centers on both sides of the country. These efforts were already underway but have become more urgent, he said.

“The timing of these pressures and the timing of the implementation of the strategy is the friction point,” he said.

Some analysts and retail experts are not convinced.

Neil Saunders, CEO of GlobalData Retail, called Bed Bath’s results “absolute carnage.” He said Bed Bath needs to rectify its operations or risk sales slipping further.

He also questioned whether the company owed its performance in part to geopolitical dynamics – noting that its quarter ended just two days after Russia invaded Ukraine.

“These results are very, very bad, and I know they’re trying to put them on external factors, and I understand why – I would probably do the same,” he said. “But now the coming year is really an acid test for them because they now have to prove that the strategy they put in place has legs and that it can work in the long run.”

Saunders said the retailer should separate its own identity instead of copying competitors like Target and move faster to reflect consumer mood on its website and with in-store exhibits. For example, he said, he missed the “cozy” trend in the first months of the pandemic by not moving bedding and other related home goods to the front of the store.

CNBC contacted Bed Bath for an answer to Saunders’ criticism, but it did not immediately comment.

Chasing growth opportunities

On an earnings call, Tritton stressed the retailer’s growth potential. He said the company plans to open 20 to 25 new BuyBuy Baby stores and remodel 130 to 150 Bed Bath stores this year. With the further remodeling of its namesake’s banner stores, he said it would have rebuilt over 200 locations – or about a quarter of its Bed Bath stores – by the end of the fiscal year.

He also pointed to new initiatives, including an agreement with Kroger to sell products on its website and to open stores in its grocery stores.

And he said it wants to capitalize on an expected wedding boom this year by encouraging couples to sign up in its stores. He said the company “sees an increase” in registrations for weddings and baby registration.

“We just need to have our warehouse in stock to be able to facilitate that,” he said.

Along with carrying out its turnaround efforts, Bed Bath will have to compete for customer dollars as inflation is around four decades high. Consumers are also considering other consumption priorities, such as summer vacations and spring wardrobes, which may direct their attention elsewhere.

Saunders said, however, that higher prices could actually inspire Americans to focus on the home again.

“People might say, ‘Well, it’s a little expensive, so we’ll spend a little more time at home instead of vacationing, so we’ll prioritize being in the garden and being outside,’ he said. “All those things are areas that they need to look at, and they need to be very tactful in saying, ‘Where are the growth spots? And let’s turn into them.'”

Tritton acknowledged in a CNBC interview that the background is tougher, especially since households no longer have extra dollars from the government, such as child tax deductions. Still, he said he is optimistic about the long-term outlook.

“We think there is an evergreen, strong home market that has had some erratic ups and downs, and when it normalizes, we think there is a great business to be had,” he said. “We are a part of customers’ lives and their wants and needs, and ensuring we are in stock and servicing that need is our most important agenda.”

Read the company’s earnings press release here.

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