Bed Bath & Beyond Inc. reported mixed fourth-quarter results as the ongoing store closures and the sale of its non-core banners — both key to its turnaround strategy — took a toll on its sales.
The home goods chain reported net income of $9.1 million, or $0.8 per share, for the quarter ended Feb. 27, after a loss of $65.4 million, or 53 cents per share, in the year-ago period. Adjusted earnings of $0.40 topped analysts’ estimates of $0.31.
Net sales fell 16% to $2.619 billion, missing estimates of $2.627 billion, driven by the sale of Christmas Tree Shops and Cost Plus World Markets and ongoing store closures, the company said. Excluding these impacts of approximately 12%, Bed Bath & Beyond said its core banner net sales decreased approximately 3%, primarily due to store closing activity.
Comparable sales increased for the third consecutive quarter, with total enterprise comparable sales growth of 4%, led by digital growth of approximately 86%. Comparable store sales decreased 20%.
Comp sales at the Bed Bath & Beyond banner rose 6%, with digital growth of approximately 99%. Growth was driven by key destination categories including bedding, bath, kitchen food prep, indoor décor and home organization, which had strong comp sales growth of 12% (combined) and represented almost two-thirds of total Bed Bath & Beyond banner sales in the fourth quarter.
Buybuy Baby returned to delivering comparable sales growth in the quarter, led by strong digital growth of over 50%, which represented almost two-thirds of the brand’s sales, the retailer stated.
Bed Bath & Beyond released its results days after it unveiled one of its biggest brand campaigns ever in a move to position itself as the leading authority in the $180 billion home goods market. The campaign comes amid a big private label push by the retailer. Bed Bath & Beyond. The company will launch at least eight store brands in fiscal 2021— six in the first part of year with at least 10 owned brands will be introduced in the next two years.
In addition to more owned brands, Bed Bath & Beyond’s turnaround plan also includes store remodels and ongoing tech investments. The company plans to invest some $250 million during the next three years to remodel about 450 stores, which represent approximately 60% of the company’s revenue.
“Fiscal 2020 was a year of fast-paced transformation in which we reformed the past, overcame extraordinary circumstances of the present, and established a firm foundation for the future,” said president and CEO Mark Tritton.”We are excited to start fresh in 2021 with our sharpened size and scale, a healthier portfolio of core banners and a stronger financial position to execute the first phase of our 3-year transformation journey.”
The company forecast its first-quarter net sales to rise by more than 40% year over year. Analysts had been calling for a 45.8% increase. Excluding the impact from divested businesses, however, Bed Bath & Beyond said sales from its four core banners could grow upwards of 65% to 70%.
“We are excited to start fresh in 2021 with our sharpened size and scale, a healthier portfolio of core banners and a stronger financial position to execute the first phase of our 3-year transformation journey,” stated Tritton. “As our transformation continues to take hold, we will show up differently for our customers with enhanced omnichannel experiences and modern stores, new communications and differentiated Owned Brands that will elevate the shopping experience and make it even easier to shop with the new Bed Bath & Beyond."