Source: Bed Bath & Beyond
Bed Bath & Beyond reported a double-digit drop in fourth-quarter tax sales on Wednesday as store closures and divestments that are part of a larger investment plan continue to weigh on results.
Its shares fell more than 8% in premarket trading, as some investors hoped to find clearer signs of progress.
“There are some positive things, but it’s still moving,” said Jessica Ramirez, a retail research analyst at Jane Hali & Associates. “Knowing the street, they want these changes quickly. Right now, investors want things to be a little better.”
The big box retailer reaffirmed previous sales forecasts for the next fiscal year, noting that the positive momentum for sales has been maintained in the current quarter. Many Americans have flocked to stores and the company’s website during the Covid pandemic to buy cleaning supplies, appliances, bedding and other household items.
However, the results of his first quarter will be messy, Mark Tritton explained in an interview. During the period of last year, all Bed Bath & Beyond stores were closed due to the health crisis and relied entirely on their digital business to fuel sales. Unlike some retailers, most notably Walmart and Target, who have been able to keep their stores open throughout the pandemic.
“What you see is some numerical turbulence,” Tritton said. “You’ll see a fork in the retail market.”
The following explains how the company did during the quarter ended February 27, compared to what analysts predicted, using a Refinitiv survey:
- Earnings per share: 40 cents adjusted compared to the planned 31 cents
- Revenue: $ 2.62 million compared to projected $ 2.663 million
Bed Bath & Beyond’s net revenue during the period grew to $ 9.1 million, or 8 cents per share, compared to a loss of $ 65.4 million, or 53 cents per share, a year earlier. . Excluding spot adjustments, the company earned 40 cents per share, better than the 31 cents predicted by analysts, consulted by Refinitiv.
Net sales fell about 16%, to $ 2.62 million, from $ 3.111 million a year earlier. That was slightly below the $ 2.63 billion analysts forecast.
The company said the year-over-year decline was driven in part by the sale of its Christmas tree stores and the Cost Plus World Market business, as well as the continued closure of stores.
Sales at the same store increased 4%, the company said. Online sales increased 86% during the fourth quarter, but that wasn’t enough to fully offset the two-digit decrease in in-store traffic. The company noted that 41% of online sales were met in stores.
Within the eponymous Bed Bath & Beyond business, it experienced the greatest growth in home organization, followed by the preparation of kitchen meals, interior decorating and then bedding. Sales at the same Bed Bath & Beyond banner store increased 6%.
Bed Bath & Beyond reaffirmed its fiscal sales outlook for 2021 which returned in January, calling for sales to be between $ 8,000 and $ 8.2 billion. According to Refinitiv, analysts estimated sales of $ 8.181 billion in 2021.
The current quarter will be affected not only by store closures from the previous year’s period, but also by the company’s ongoing restructuring. Its four basic standards are Bed Bath & Beyond, Buybuy Baby, Harmon Face Values and Decorist.
The retailer expects net sales for the first quarter to increase by more than 40% year-on-year. Analysts had called for a 45.8% jump. While ruling out the impact of the ceded companies, Bed Bath & Beyond said sales of its four core banners could grow from 65% to 70%.
‘First days’
Bed Bath & Beyond, CEO of Mark Tritton
Source: Bed Bath & Beyond
Tritton played a crucial role in his previous concert as Target’s chief retailer, to help the big retailer generate excitement with customers around exclusive brands and refurbished stores. Wall Street is still waiting to see if it achieves the same success at Bed Bath & Beyond.
As part of Tritton’s investment plans, Bed Bath & Beyond is in the process of remodeling between 130 and 150 stores this fiscal year, including 26 renovations during the first quarter. It just completed its first batch at the Houston market in February.
The company said it will invest about $ 250 million over the next three years to remodel about 450 Bed Bath & Beyond stores in total. This involves breaking down the hallways and removing piles of tall merchandise from the sky that are often seen on the top shelves, adding new signage, and installing more modern light fixtures.
“These are early days,” Tritton told CNBC about the remodels. “We usually have an adjustment period as we go through each remodel … it’s a 12-week process.”
Bed Bath & Beyond also strengthens its list of private labels in different categories of household products. It plans to launch at least eight brands this year, hoping the exclusivity will be enough to drive people to its stores during the competition, which includes Amazon.
Last month he debuted with Nestwell, which sells bedding and bathtubs. Haven, a spa-inspired bath brand, will be launched next week.
Bed Bath & Beyond has said it expects its private label sales to grow and account for 30% of its business within three years, up from the current 10%. The company said these efforts should also help increase its profitability.
As the year progresses, Bed Bath & Beyond said it expects a sequential improvement in profit margins. His hope is that the pressures arising from rising transport costs, which have affected many retailers throughout the pandemic, will be reduced.
“In 2020, our digital mix in stores was resized,” Tritton said. “A digital sale, because of shipping costs, is always a little different. We’ll see it recalibrate in 2021.”
This year, the company plans to recover $ 325 million from its own shares, up from $ 300 million last year. Its three-year repurchase authorization was increased to $ 1 billion ($ 825 million).
Shares of Bed Bath & Beyond have risen about 57% to date, since Tuesday’s market close. The company has a market cap of $ 3.4 billion.
Here’s the full press release on Bed Bath & Beyond’s earnings.
—CNBC Courtney Reagan has contributed to this report.