Bed Bath & Beyond Q4 Comps Slip

Bed Bath & Beyond’s comps slipped in the fourth quarter, as the company’s investments continue to weigh on results as it looks to reinforce its position in the marketplace.

In the fourth quarter, ended March 3, Bed Bath & Beyond recorded net earnings of $194 million, or $1.41 per diluted share, versus $268.7 million, or $1.84 per diluted share, in the 13-week year-prior period.

With the net unfavorable impact from the tax reform legislation excluded, net earnings per diluted share in the fiscal 2017 fourth quarter were $1.48 versus $1.84 in the year-earlier period. With that adjustment, Bed Bath & Beyond topped a MarketBeat analyst average estimate of $1.41.

Comparable sales decreased 0.6%, with strength in customer-facing digital channels offset by a store decline in the mid-single-digit percentage range. Net sales were $3.72 billion versus $3.53 billion in the year-previous period. Operating profit was $337.1 million compared with $429.9 million in the previous fourth quarter.

For the fiscal year, Bed Bath & Beyond posted net earnings of $424.9 million, or $3.04 per diluted share, versus $685.1 million, or $4.58 per diluted share, in the year prior. With the net unfavorable impact from the tax reform legislation excluded, net earnings per diluted share would have been $3.12, the company stated, versus $4.58 in the year-earlier period.

Net revenues in the fiscal year were $12.35 billion versus $12.22 billion in the fiscal year previous. Operating profit was $761.3 million compared with $1.14 billion in fiscal 2016.

In a conference call, Steven Temares, the company’s CEO, said Bed Bath & Beyond has been intent on reinforcing its position in the marketplace as the foremost expert for consumers who are purchasing for the home everyday and in response to life events. As such, the company has been making significant investments in a strategic roadmap that supports its position even though the investments have weighed on Bed Bath & Beyond’s expense structure and profitability.

“During the past few years, we have been transforming our company while continuing to conduct business day in and day out,” he said. “We have challenged past practices, policies and organizational structure while taking advantage of internal and external expertise, better processes and ever-developing technology, all with the intent of better positioning ourselves to execute the strategic initiatives on our roadmap.

“The next few years of our roadmap are clear, as is our destination, and can be broadly expressed in four major areas of focus. We will have a merchandise assortment that is substantively and meaningfully differentiated, that could be made available in all channels and from all concepts, that could be fulfilled from a common distribution network, and we will be known for whole home, represented in part by a deep presence in decorative furnishings. We will be in a position to intelligently and dynamically price our assortment across all channels directed by pricing specialists and driven by systems powered by machine learning. Our value proposition will be further supported by a membership program that is robust, uniquely positioned in the marketplace in terms of offerings.

“We will present best-in-class services and solutions reflecting our leadership and our life stage businesses, and strengthen our customer relationships through expanded and faster delivery options as well as a premier offering of in-home services, and we will deliver a superior customer experience across all channels: our frictionless digital experience that is more personalized, more inspirational, more educational and enjoyable to use, as well as a store experience that is more engaging, that shows more with less inventory and presents products that the customer wants and needs today in a store environment including a world-class seasonal offering, commodity and deep value product, and a treasure hunt experience, all supported by marketing that is both personalized and communicates our branding message.”

Temares added that the company already has begun restructuring its merchant organization, piloted a new decorative furnishings merchant team and expanded capabilities including establishing a sourcing office in Shanghai as a step toward doing more direct importing and sourcing. The company also will invest in faster delivery for online purchases.