Dive Brief:
- As it works to execute on its turnaround strategy laid out last month, Bed Bath & Beyond on Thursday reported second quarter net sales fell 28% year over year to $1.4 billion, while comparable sales declined 26%.
- By banner, comp sales at Bed Bath & Beyond fell 28%, “reflecting legacy merchandise assortment, out of stocks, and continued trends in customer traffic,” according to a company press release, while comps at BuyBuy Baby declined by a “high-teens percentage.”
- The company’s operating loss more than quadrupled to $346.2 million from $84.1 million in the year-ago period, while net loss grew fivefold to $366.2 million from $73.2 million last year.
Dive Insight:
About a month after Bed Bath & Beyond outlined a plan it hopes will restore the business, the retailer is pushing deeper into the red.
As part of its turnaround strategy, the retailer announced it would lay off about 20% of its corporate and supply chain staff, discontinue three of its nine private labels in favor of national brands and close more than 150 stores.
In its first wave of closures, Bed Bath & Beyond earlier this month released a list of over 50 stores slated to shutter and the retailer on Thursday said at least 100 locations will close by the end of the fiscal year.
And while it’s still early in its latest plan, the retailer’s second quarter results haven’t instilled much confidence from analysts in its future.
“Although desperate to show some green shoots of recovery, Bed Bath & Beyond’s second quarter numbers reveal the company is still tending a patch of very barren earth. Indeed, in several respects the numbers are worse than the calamitous first quarter, with sales deteriorating at a more rapid clip,” GlobalData Managing Director Neil Saunders said in emailed comments. “In our view, the two problems with the plan is that it isn’t particularly compelling, and it will take significant time to enact.”
Bed Bath & Beyond — which experienced a boost in the early months of the pandemic as consumers actively sought out products for their homes — has faced falling sales and traffic more recently. And while the company late last month secured $500 million in new financing, which includes a recently expanded $1.13 billion asset-backed revolving credit facility and a new $375 million “first-in-last-out” facility, staving off an immediate bankruptcy filing, it faces other challenges, particularly with its leadership.
Bed Bath & Beyond has experienced significant changes to its C-suite recently. Mark Tritton, who joined the retailer from Target in late 2019, exited his role as CEO in June, replaced in the interim by Sue Gove. Laura Crossen earlier this month took over the chief financial officer role in the interim following Gustavo Arnal's death. Other positions, including chief merchandising officer, chief operating officer and chief stores officer have also faced changes as well.
Bed Bath & Beyond reiterated its outlook for the remainder of the year: The company expects comp sales to decline about 20%, capital expenditures to be about $250 million and adjusted SG&A to be about $250 million below last year’s levels.
“Overall, we remain extremely negative on Bed Bath & Beyond,” Saunders said. “This is a company on borrowed time, and the clock is ticking.”
