Bed Bath & Beyond Finds Comp Gains In Rough Q3

Bed Bath & Beyond indicated that advances in core categories and digital operations helped drive comparable sales gains and an adjusted earnings turn around in its fiscal third quarter,  but the company still fell short of a Wall Street earnings estimate.

Bed Bath & Beyond posted a net loss in the quarter ended November of $75.4 million, or 61 cents per diluted share, versus a net loss of $38.6 million, or 31 cents per diluted share, in the year-prior quarter.

Adjusted for one time charges including net loss on sales of businesses as the company sheds non-core operations, Bed Bath & Beyond reported net earnings of $10.4 million, or eight cents per share, versus a net loss of $46.9 million, or 38 cents per share, in the period a year earlier.

Bed Bath & Beyond came up short of a MarketBeat-published adjusted earnings per share analyst consensus estimate of 19 cents.

Comparable sales gained 5% in the core Bed Bath & Beyond banner in the quarter year over year, the company maintained, while total enterprise comparable sales increased 2%. Comps benefited from strong gains in digital channels, including 94% growth in the Bed Bath & Beyond banner and total enterprise growth of 77%, it added. Total enterprise comparable store sales declined 15%.

Key destination categories including Home Organization, Kitchen Food Prep, Bedding, Bath and Indoor Décor drove Bed Bath & Beyond banner sales. Those categories enjoyed comp growth of 11% combined and represented two-thirds of total banner sales in the quarter. In a conference call, Gustavo Arnal, the company’s CFO and treasurer, said headwinds related to the COVID-19 pandemic had a negative effect across the company but particularly at the buybuy Baby operation.

Bed Bath & Beyond stated that it has been prioritizing merchandising and marketing investments in Home Organization, Kitchen Food Prep, Bedding, Bath and Indoor Décor at the namesake banner to strengthen its authority in the home space. The company also stated that the bed Bath & Beyond banner has achieved market share gains in the destination Bed category, with improving trends in Bath and Kitchen.

Third quarter net sales came in at $2.62 billion, down 5% compared to the quarter a year past, primarily due to portfolio transformation, Bed Bath & Beyond asserted, including the planned divestitures of non-core banners and store closing activity as part of the company’s network optimization initiative. Total enterprise store net sales declined 17% from the year-previous period and digital net sales increased 75% in the quarter year over year, according to Bed Bath & Beyond.

Operating loss was $122.8 million versus an operating loss of $29.8 million in the period a year before.

In announcing the financial results, Mark Tritton, Bed Bath & Beyond’s president and CEO said, “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. We knew this holiday season would be like no other, and we took several steps in advance to help our customers shop safely and with ease, including over 100 meaningful improvements to our digital-first, omni-always customer experience and enhancements to our contactless new store and curbside pickup and same day delivery service offerings. We are delighted by the strong customer response to these efforts. We are seeing a deepening level of recognition and engagement from our customers, including the more than two million new online customers in the third quarter. We are also seeing favorable market share trends in several of our key destination categories, including positive share gains over the past two months within the bed category.”