Bed Bath & Beyond swings to Q1 loss; ‘reviewing’ brand portfolio
Bed Bath & Beyond is likely to be closing some stores and divesting itself of some non-core brand assets as part of its turnaround efforts.
The beleaguered home goods company on Thursday reported a net loss of $371.1 million, or $2.91 a share, for the quarter ended June 1, compared with net earnings of $43.6 million, or $0.32 cents, in the year-earlier period. After adjusting for an impairment charge as well as severance and other costs, Bed Bath & Beyond posted earnings of $0.12 cents a share. Analysts had expected adjusted earnings of $0.08.
Net sales fell 6.6% to $2.57 billion, missing Street estimates of $2.58 billion. Same-store sales were down 6.6%.
Bed Bath & Beyond is working to revamp its operations to better compete against increased competition online and off, from upstarts and such traditional players as Walmart and Target. The chain is also under pressure from a group of activist investors. In May, longtime CEO Steven Temares stepped down amid ongoing pressure from the group who blame him for the chain’s faltering performance and are pushing for changes. Prior to his departure, the group released a 100-plus page document that detailed Bed Bath & Beyond’s “stale retail perspective” and called for the immediate removal of Temares, blaming him for more than a decade of underperformance. (Board member Mary Winston is serving as interim chief while the company searches for a permanent replacement.)
Going forward, Bed Bath & Beyond said it has set several near-term priorities: stabilizing and driving topline growth, resetting its cost structure, re-organizing the business structure and “reviewing and optimizing” its asset base, including its portfolio of retail banners. In addition to its namesake brand, the company’s banners include Cost Plus World Market, World Market, Christmas Tree Shops, buybuy Baby, Harmon and Kings Lane. As of June 1, it had a total of 1,536 stores.
On the retailer’s earnings call, Winston said the company is still evaluating which brand concepts will remain in the portfolio but is “working with a sense of urgency.” The news is likely to please the investor group, whose plan included the sale of non-core assets, saying a divestiture could generate about $1.4 billion.
In addition, Winston said the chain is undertaking a fleet optimization project for all Bed Bath & Beyond stores to understand how best to position its store locations in various markets across the country and Canada.
“We anticipate leveraging the findings of this fleet optimization project to evaluate potential store closures and/or relocations,” she said. “Our ultimate objective is to find the right balance between our physical and digital presence within the markets we serve and to deliver the shopping experience our customers want.”
For the fiscal year, excluding the goodwill and other impairments, severance and shareholder activity costs, the retailer is guiding to the lower end of its previously provided ranges of $2.11 to $2.20 of profit and $11.4 billion to $11.7 billion for net sales.
“Bed Bath & Beyond is an iconic brand with tremendous opportunity and we recognize that there needs to be a fundamental change in our approach to executing the company’s business transformation,” stated Winston. “We are committed to completing a deep review of the business to prioritize and drive forward the most meaningful initiatives to improve performance.”
Name one reason to shop at Bed, Bath & Bankruptcy instead of [insert online store here]? We went from shopping once a month to once every few years. You have to drive there. They may or may not have the item(s) in stock.