People leave a Bed Bath & Beyond store amid the coronavirus disease (COVID-19) pandemic in New York, Jan. 27, 2021.
Carlo Allegri | Reuters
Bed Bath & Beyond shares lost more than 28% in pre-trading hours on Thursday as the company said it saw a sharp drop in buyer traffic in August, which took a blow to its second-quarter results.
The wholesaler is also dealing with industry-wide supply chain complications that are “ubiquitous” according to CEO Mark Tritton. He said costs escalated over the summer months, particularly towards the end of the second quarter of August, which had an impact on sales and profits.
Bed Bath & Beyond has cut its sales and earnings outlook for the year and its guidance for the third quarter looks disappointing.
The sell-off in the share was robust. Even before the market opened on Thursday, more stocks had changed hands than is typical for Bed Bath & Beyond on an average day.
Here’s how Bed Bath & Beyond performed in the second quarter ended August 28 compared to Wall Street’s expectations, based on a refinitive poll of analysts:
- Earnings per share: 4 cents adjusted vs. 52 cents expected
- Revenue: $ 1.99 billion versus $ 2.06 billion expected
In the most recent period, Bed Bath & Beyond lost $ 73.2 million, or 72 cents per share, compared to net income of $ 217.9 million, or $ 1.75 per share, last year. Excluding one-off effects, the company earned 4 cents per share, which was less than the 52 cents expected by analysts.
Revenue declined 26% to $ 1.99 billion from $ 2.69 billion last year. That fell short of the estimate of $ 2.06 billion.
“Although our results for the quarter were below expectations, we remain confident in our multi-year transformation,” Tritton said in a press release.
Bed Bath & Beyond has rebuilt its stores and launched its own brands that sell everything from bath towels to cooking utensils to dorm decorations. In the previous quarter, it seemed like those efforts paid off and the business gained momentum.
But this progress stalled in the summer months. Tritton stated that the environment became more difficult as Covid-19 fears re-emerged amid the spreading Delta variant. In states like Florida, Texas and California, which make up a significant portion of sales, business has been impacted due to rising coronavirus cases in the area, Tritton said.
That means that not as many shoppers have shown up during the normally busy back-to-school season for retailers like Bed Bath & Beyond. It could mean trouble for rivals like Target, Walmart and Kohl, who are yet to have to report back-to-school results.
Bed Bath & Beyond expects adjusted earnings between breakeven and 5 cents per share for the third quarter on sales of $ 1.96 billion to $ 2 billion. According to Refinitiv data, analysts had expected earnings of 28 cents per share on sales of $ 2.02 billion.
For the year, Bed Bath & Beyond lowered its expectations and now aims to make between $ 70 cents and $ 1.10 per share on an adjusted basis on sales of $ 8.1 billion to $ 8.3 billion.
Previously, the company had claimed annual adjusted earnings of between $ 1.40 and $ 1.55 per share on sales of $ 8.2 to $ 8.4 billion.
Analysts forecast adjusted earnings per share of $ 1.51 on revenue of $ 8.31 billion in fiscal 2021.
The full press release from Bed Bath & Beyond can be found here.