Home-goods retailers cite high costs, supply-chain issues and marketing missteps, including cutting down on printed circulars
Shares fell 22% to $17.27, wiping out year-over-year stock gains.
Net sales fell 26.2% to $1.98 billion in the second quarter of the fiscal year ended August 28, as traffic slowed in August, the company said. Bed Bath & Beyond also lowered its sales and adjusted profit expectations for the year as it anticipates more supply-chain challenges.
Challenges in the company’s operating environment were evident in key states such as Florida, Texas and California, all of which make up a substantial portion of sales, Tritton said. He added that cost inflation also outpaced the significant growth that the company had already anticipated, especially in the latter quarter.
Bed Bath & Beyond found operating conditions worse than it had prepared for, and the challenges the company faced in August have not ended in September, Mr Tritton said.
He said on a conference call, “Inflationary momentum and lead-time pressures from the industry held back our plans to offset these headwinds and, as a result, we did not pivot fast enough, particularly on price and margin recovery.” ”
Mr Tritton said the company has disproportionately reduced the distribution of its printed circulars, which have been a major driver of traffic. “One of the significant missteps” was Bed Bath & Beyond cutting back on key traffic drivers during the quarter, which were traditionally strong, they said, as the company began to shift customer engagement toward online and social media channels. had demanded.
Mr. Tritton is trying to intensify the marketing of Bed Bath & Beyond to make it clear that its prices are competitive. He is revamping the chain by moving name-brand goods from in-house brands and removing clutter from stores. Analysts said it may take some time for those moves to gain traction. Company Amazon.com Inc. and off-price retailers like TJ Maxx and HomeGoods, both owned by TJX Cos, are perceived as offering better value.
Bed Bath & Beyond posted a net loss of $73.2 million for the quarter, compared to a profit of $217.9 million a year ago. Adjusted earnings were 4 cents per share, less than 52 cents for stock analysts surveyed by FactSet.
The company now expects its fiscal 2021 sales to be between $8.1 billion and $8.3 billion, down from its prior outlook of $8.2 billion to $8.4 billion. It expects adjusted earnings of 70 cents per share to $1.10 per share, compared to its previous expectation of $1.40 per share.
Supply-chain disruptions have affected everything from sneakers to artificial Christmas trees. dollar Tree Inc.,
For example, this week it said it would begin selling products at prices slightly above $1 in some of its stores, selling items at higher price points amid supply-chain shocks, a tight labor market, and high inflationary costs. of the first tests.
Federal Reserve Chairman Jerome Powell said the central bank continues the current surge in prices, mainly due to supply-chain constraints, before fading into the next year. At the same time, economists expect the recovery from the pandemic to accelerate as the toll of the coronavirus eases after a delta version of economic growth slowed this summer.
—Suzanne Kapner contributed to this article.
Dave Sebastian [email protected] . Feather