Bed Bath & Beyond Inc. (BBBY, Financial) released its first-quarter financial results after the market closed on July 8. The New Jersey-based home goods retailer posted quarterly earnings and revenue that lagged behind analysts’ expectations.
Although the company’s digital sales surged during the quarter, this did very little to help its overall quarterly results.
Overview of the quarter
The company registered an adjusted loss per share of $1.96 on revenue of $1.31 billion. Analysts had projected a loss per share of $1.22 on $1.39 billion in revenue.
Online sales jumped a mammoth 82% in the reported quarter and made up roughly two-thirds of total quarterly revenue. The company noted its online sales grew in excess of 100% during April and May.
The retailer’s gross margin dropped to 26.7%, driven by online selling resulting in higher fulfilment and shipping expenses.
Reflecting on the quarter, President and CEO Mark Tritton commented:
"The impact of the COVID-19 situation was felt across our business during our fiscal first quarter, including loss of sales due to temporary store closures and margin pressure from the substantial channel shift to digital.”
The company claims to have "adequate" liquidity, and that it will be able to navigate through the foreseeable future until the prevailing circumstances improve and recover. At the end of the first quarter, the company’s balance of cash and investments stood at a combined $1.2 billion.
Response to Covid-19
Bed Bath & Beyond said it is planning to permanently shut down nearly 200 brick and mortar locations during the next two years, beginning later in 2020. The company said that the move would result in annual savings of around $250 million to $350 million, barring related one-time costs.
As of May 30, the company had as many as 1,478 stores that include 955 Bed Bath & Beyond shops.
As of the earnings report, almost all of company’s stores are back open. Consumers are buying high-priced items such as home décor, bedding and accessories for the backyard, which reflects a shift from stocking up on cleaning supplies, water filters and coffee during the month of April and May.
“We are encouraged by early customer response, including continued strong demand, in excess of 80%, across our digital channels during the month of June, bolstered by the expansion of our Buy-Online-Pick-Up-In-Store (BOPIS) and Curbside Pickup services. We believe Bed Bath & Beyond will emerge from this crisis even stronger, given the strength of our brand, our people and our balance sheet," Tritton said.
Guidance
The company pulled its financial forecast for 2020 due to the global uncertainty caused by the coronavirus pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
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