Retailer to shut down 200 stores by 2022
Bed Bath & Beyond Inc. (NASDAQ:BBBY) released its third-quarter financial results before the market opened on Jan. 7.
The New Jersey-based home goods retailer posted quarterly earnings and revenue that lagged behind analysts’ expectations. Although the company’s digital sales nearly doubled compared to the prior-year quarter, this did very little to help its overall quarterly results.
Overview of the quarter
The company registered adjusted earnings per share of $0.08 on revenue of $2.62 billion. Analysts had projected EPS of $0.19 on $2.75 billion in revenue.
Comparable store sales, which include both Bed Bath’s brick-and-mortar and website sales, inched up 2% thanks to strong online demand.
Reflecting on the quarter, President and CEO Mark Tritton commented:
“The consistent execution of our growth strategy is unlocking improved financial performance and we delivered a second consecutive quarter of comparable sales and profit growth. Additionally, we drove strong cash flow generation and balance sheet improvements in the third quarter and have re-initiated capital return to shareholders.”
The company claims to have adequate liquidity, and that it will be able to navigate through the foreseeable future until the Covid-19 circumstances improve and the company can recover. At the end of the third quarter, the company’s balance of cash and investments stood at a combined $1.5 billion.
Online sales across all of the company’s brands jumped 77% in the reported quarter. This is inclusive of the 94% online growth that it witnessed during the quarter, bolstered by the expansion of Buy-Online-Pick-Up-In-Store (BOPIS) and curbside pickup services.
The company re-launched mobile applications Bed Bath & Beyond and Buy Buy Baby during the quarter, which witnessed about 8, 00,000 downloads combined. The company said it added 7 million new online customers year to date, while in the quarter, the company added about 2.2 million new customers.
Response to Covid-19
Bed Bath & Beyond said it is planning to permanently shut down nearly 200 brick and mortar locations by 2022, which it attributes to the effects of the pandemic. The company said that the move would result in annual savings of around $250 million to $350 million, barring related one-time costs.
As of the earnings report, almost all of company’s stores are back open. Consumers are buying more high-priced items such as home décor, bedding and accessories for the backyard, which reflects a shift from stocking up on cleaning supplies, water filters and coffee during the months of April and May.
Bed Bath pulled its financial forecast for fiscal 2020 fourth quarter. The company did mention that it expects comps to remain flat as compared to the year-ago period, while sales are predicted to decline by the double-digits.
As for fiscal year 2021, the company said it expects comps to be steady. Earnings for the same period are estimated to around $500 million to $525 million.
Disclosure: I do not hold any positions in the stocks mentioned.
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