Bed Bath & Beyond reports 28% drop in sales as it presses ahead with turnaround plan

Bed Bath & Beyond on Thursday said sales plunged by 28% in the fiscal second quarter, as the home goods retailer struggled to draw customers.

Its shares bounced around in premarket trading, as investors assessed the report. The company’s stock has been volatile, fueled in part by the meme stock frenzy as well as drastic changes to its business.

Bed Bath reiterated its full-year outlook, saying it anticipates comparable sales to decline by about 20% as its business improves in the back half of the fiscal year.

Here’s how the retailer did in the three-month period ended Aug. 27 compared with what analysts were anticipating, based on Refinitiv data:

• Loss per share: $3.22 adjusted vs. $1.85 expected
• Revenue: $1.44 billion vs. $1.47 billion expected

The company’s net loss widened significantly to $366 million, or $4.59 per share, from $73 million, or 72 cents per share, a year earlier. Its net sales dropped from $1.99 billion in the year-ago period.

Comparable sales declined 26% in the second quarter. The key retail metric, often called same-store sales, is a year-over-year comparison of online sales and sales at stores that have operated for 12 full months following an opening period of about six to eight weeks.

One of the bright spots of Bed Bath’s business, Buybuy Baby, also posted a sharp drop in the quarter. Its comparable sales decreased in the high teens compared with growth of high teens in the year-ago quarter.

The quarterly report does not reflect the company’s latest turnaround effort. In late August, it shared plans to shake up its merchandising strategy, and strengthen its namesake stores and baby goods chain, Buybuy Baby. It also announced cost-cutting measures, including layoffs and closing about 150 Bed Bath & Beyond stores.

Read more: Here’s a map of Bed Bath & Beyond store closures

Interim CEO Sue Gove said in a news release Thursday that the company is fixing inventory problems by speeding up markdowns of some merchandise. She said Bed Bath is “confident that our current liquidity will enable the necessary changes we are implementing.”

Gove said the company’s loyalty program, Welcome Rewards, has grown by more than 1.3 million since the end of August, bringing it to a total of 6.4 million members since it launched this summer. She said it is lowering costs by about $250 million for the second half of the fiscal year, as it works to ramp up sales.

Bed Bath faces several significant challenges, including mounting debt, vacant leadership roles and tense relationships with vendors. As the company gears up for the crucial holiday season, it is led by Gove, an interim CEO, and interim CFO Laura Crossen. Its board pushed out former CEO Mark Tritton in June, and CFO Gustavo Arnal died by suicide in early September.

In late August, Bed Bath got some relief by securing more than $500 million of new financing, including a $375 million loan.

Bed Bath’s liquidity is $850 million after repayments and borrowing that took place before the second quarter began, the company said Thursday.

The coming months will test whether the retailer can get hot holiday items and popular national brands, which are pivotal to its latest strategy. According to former company executives, Bed Bath has had strained relationships with suppliers — and could face a repeat of two Christmases ago, when it did not have several hot products from well-known national brands.

In a news release, Gove said working with Bed Bath’s suppliers has “been an important focus area” and said its debt and liabilities with them “are considerably healthier than in the prior quarter.”

As of Wednesday’s market close, Bed Bath’s shares are down about 56% so far this year. The company’s market value is $516.5 million.

Read the company’s earnings release here.

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