Bed Bath and Beyond reported an astonishing holiday-quarterly loss on Wednesday, as the company had low inventory and struggled to get goods out of congested ports and onto shelves.
Shares in Premarket Trading fell less than 1%.
CEO Mark Triton said the company missed nearly $ 175 million in fiscal fourth-quarter sales due to out-of-stock merchandise. This is higher than in the previous quarter, when the supply chain disruption cost the company about $ 100 million.
Triton said in a CNBC interview that the home goods retailer was disappointed by its results. He said the “macro-major problem of the environment” has slowed the company’s transformation efforts. For example, he said, products cost more to move, and some of the best-selling items of the national brand have a short supply due to missing components, such as microchips, which go to waste. Also, most of its seasonal goods get stuck in the port and arrive late, he said.
He said some of these challenges have borne out in the current quarter.
Still, Triton says Bed Bath is making progress with its transformation. He said it is rebuilding stores, investing in technology, welcoming customers through postcards and targeted emails, and expanding its more lucrative personal label business.
Bed Bath is on a stylish ride, as Target tries to refresh the retailer’s brand by closing down experienced Triton private label products, store remodels and low performing locations. Its stock has been pulled in a meme-stock rally with AMC Entertainment and Gamestop. It also comes under pressure from investors – including activist Ryan Cohen, chairman of Gamestop and founder of Chewie.
The retailer recently signed a deal with Cohen’s firm, RC Ventures, to add new board members and explore whether its Byby Baby business should close or be sold, which is one of its bright spots.
Bedbath did not give a specific forecast on Wednesday, but said it expects sales and margins to improve in the second half of the coming fiscal year as the supply chain situation eases.
Here is how the retailer did in the three-month period ending February 26, compared to what analysts had expected based on referential data:
- Loss per share: Expected gain of 92 cents vs. 3 cents
- Revenue: $ 2.05 billion vs. $ 2.07 billion expected
The company’s net loss increased to $ 159 million, or 1.79 per share, from net income to $ 9 million or 8 cents per share, a year ago. With the exception of the one-time item, it lost 92 cents a share. Analysts surveyed by Refinitiv expected earnings per share of 3 cents.
Sales fell 22% to $ 2.05 billion from $ 2.62 billion a year earlier. That’s less than the 2.07 billion estimate.
Same-store sales, a key retail metric, saw a 12% decline in the bed bath business compared to the same period last year. Same-store sales for Bed Bath and Beyond Banner fell 15%, and lower single-digit growth for BuyBay Baby Banner.
Digital sales are down 18% from a year earlier, partly reflecting a return to the store and normalization of e-commerce.
Triton said Bed Bath is doing a complete overhaul of its supply chain so that it can handle all of its merchandise better as it imports goods and takes them to distribution centers and stores. He said the technology, which works like a “virtual control tower”, will go live later this month. Those efforts were already underway, but more urgent, he said.
“The time of this pressure and the time to complete the strategy is the point of friction,” he said.
In addition to trying to change that, Bed Bath must compete with buyers for dollars because inflation is at a nearly four-decade high. Consumers are also weighing other spending preferences, such as summer vacations and spring clothing, which could take their attention away from home.
Triton says the context is more difficult for retailers, especially since families no longer have extra dollars from the government, such as child tax credits. This is “reducing the overall demand for several departments, including housing,” he said.
“We think we have an evergreen, strong home market with some ups and downs and when it becomes normal, we think we have a great business,” he said. “We are part of our customers’ lives and their wants and needs and our main agenda is to ensure that we are in stock and to serve those needs.”
As of Tuesday’s close, Bed Bath’s shares have risen about 23% so far this year. The retailer’s stock closed at .9 17.97 On Tuesday, 6.75% less, bringing its market value to 1.73 billion.
Read the company’s earnings press release here.