Bed Bath & Beyond reported strong sales for its first quarter even as its profit missed expectations amid costs related to its turnaround efforts.
It was a busy quarter for the home goods retailer, which is in the first year of a three-year transformation strategy that includes a heavy emphasis on owned brands. Bed Bath & Beyond unveiled three private brands during the quarter and also launched one of its biggest marketing campaigns ever in a move to position itself as the leading destination for home goods.
“We are re-establishing our authority in home, recapturing market share and unlocking our full potential,” stated president and CEO Mark Tritton.
Bed Bath & Beyond’s net loss narrowed to $51 million, or $0.48 per share, in the quarter ended May 30, from a loss of $302 million, or $2.44 per share, in the year-ago period. Excluding one-time charges related to asset sales and other turnaround initiatives, the company’s earnings per share were $0.5 cents, missing the $0.8 cents per share that analysts had expected.
Net sales rose 49% to $1.95 billion, beating expectations for $1.87 billion and reflecting “core” banner sales growth of 73% compared to the prior-year period. (Bed Bed & Beyond’s core sales consists of revenue from Bed Bath & Beyond, Buybuy Baby, Harmon Face Values and Decorist.)
The company’s sales growth was primarily driven by its Bed Bath & Beyond banner, whose salesincreased 96% compared to last year when a significant number of stores were closed due to the pandemic. The brand’s growth was fueled by its key destination categories — bedding, bath, kitchen food prep, indoor decor and home organization — whose sales rose over 100% compared to the year-ago period and rose 7% on a comparable sales basis versus the 2019 fiscal first quarter. The categories represented approximately two-thirds of total Bed Bath & Beyond banner sales in the first quarter.
Comparable sales — which includes online and store sales— rose 86% compared with the prior year quarter, and were up 3% on a two-year basis. Digital sales jumped 84% compared to 2019.
“We have started the year in a position of strength and are clearly on track to accomplish our goals,” said Tritton. “2021 marks the first year of our three-year transformation following the groundwork we laid in 2020 – a year of historic and necessary change for this organization against the backdrop of unprecedented challenges due to COVID-19. For the first quarter, we delivered our fourth consecutive quarter of comparable sales growth with gross margin expansion exceeding our expectations.”
Bed Bath & Beyond raised its full-year revenue outlook to a range of $8.2 billion to $8.4 billion, up from its prior estimate of $8 billion to $8.2 billion. Fiscal 2021 earnings are expected to be between $1.40 and $1.55 per share on an adjusted basis. Analysts had been looking for full-year adjusted earnings of $1.47 a share on revenue of $8.15 billion.
For the second quarter, Bed Bath & Beyond said it expects to earn between $0.48 and $0.55 per share after adjustments. Sales will be between $2.04 billion and $2.08 billion.
As of May 29, the company operated a total of 1,004 stores, including 818 Bed Bath & Beyond locations.