As it acknowledged mistakes in inventory management and a failure to drive traffic, Bed Bath & Beyond released its preliminary, unaudited financial performance data for the first two months of the fiscal 2019 fourth quarter, which included a 5.4% decline in comparable sales and a 13% decline in adjusted comps.
The store traffic declines and inventory management issues were prime culprits in the decline, the retailer stated, but increased promotional activity and markdowns also had an impact. Inventory in key categories was too low or out-of-stock during the December 2019/January 2020 period, Bed Bath & Beyond acknowledged. The company’s new management has been reviewing the challenges to glean insights and learnings as it implements a strategic repositioning. It plans to immediately reform internal planning and inventory management procedures to master the fundamentals, the company said.
In the two month period, the comp decline reflected a low-double-digit percentage decrease in transactions on store sales floors, partially offset by a mid-single-digit percentage increase in the average transaction amount. Store comps declined nearly 11%, while comparable sales from digital channels grew approximately 20%. A Cyber Monday holiday week shift to the company’s fiscal fourth quarter this year from the fiscal third quarter of last year had a significant impact on comps, the company maintained. With an adjustment to take the shift into consideration, comps for the first two months of the fiscal 2019 fourth quarter declined 13%.
Mark Tritton, Bed Bath & Beyond’s recently appointed president and CEO, said, “We are experiencing short-term pain in our efforts to stabilize the business, including the pressures of store traffic trends coupled with our own executional challenges. However, we did achieve a notable positive shift in sales in our digital channels during this period, with growth of approximately 20%. I believe we can solidify this growth, while also addressing the broader stabilization of our business. We are beginning to make bold and broad-based changes to modernize our business and better serve our customers. Our ability to achieve this and change the trajectory of our current results will take time, as we remaster the fundamentals of merchandising, pricing and promotion, and focus on our digital channels as part of our go-forward strategy.”