Bed Bath & Beyond Inc. (BBBY, Financial) released its fourth-quarter fiscal 2020 financial results before the market opened on April 14.
The New Jersey-based home goods retailer posted quarterly revenue that lagged behind analysts' expectations. Although the company's digital sales were impressive during the reported quarter, this did very little to help its overall quarterly results. Earnings, however, surpassed expectations.
Overview of the quarter
The company registered adjusted earnings per share of $0.40 on revenue of $2.62 billion. Analysts had projected EPS of $0.31 on $2.63 billion in revenue.
Comparable store sales, which include both brick-and-mortar and website sales, inched up 4% thanks to strong online demand. The quarter also marked the third successive quarter of comps growth.
President and CEO Mark Tritton commented the following:
"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. 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."
The company claims to have adequate liquidity, and that it will be able to navigate through the foreseeable future until the Covid-19 circumstances improve and the company can recover. At the end of the fourth quarter, the company's balance of cash, cash equivalents and restricted cash stood at a combined $1.4 billion.
Digital transformation
The company witnessed 86% online growth during the quarter, bolstered by the expansion of Buy-Online-Pick-Up-In-Store (BOPIS) and curbside pickup services.
Recently, the company re-launched mobile applications Bed Bath & Beyond and Buy Buy Baby, which witnessed about 8 million downloads combined.The company said it added 10.6 million new online customers year to date (in fiscal 2020), while in the quarter, the company added about 3.6 million new customers.
Strategic changes and store details
Bed Bath & Beyond said it is planning to permanently shut down nearly 200 brick and mortar locations by 2022, which it attributes to the effects of the pandemic. 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 the earnings report, almost all of company's stores are back open. Consumers are buying more 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 months of December and January.
Looking ahead
Bed Bath & Beyond has provided financial forecasts for the first quarter of fiscal 2021. The company is anticipating net sales to grow by more than 40% as compared to the first quarter of fiscal 2020.
For full ffiscal 2021, revenue is projected to be around $8 billion to $8.2 billion. Net earnings for the same period are estimated to be around $500 million to $525 million.
Disclosure: I do not hold any positions in the stocks mentioned.
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