In Bed Bath & Beyond’s second-quarter earnings call on Thursday morning, the brand reported a continuation of its recent dismal performance while looking to provide some tidbits of encouragement to shareholders.
Whether the troubled big-boxer is actually able to turn itself around (in fairness, we’ve heard this all before), Bed Bath still needs to deal with the reality that it is in dire straits. Overall sales for its second quarter crashed 28 percent, including a 26 percent same-store sales drop, and it lost $336 million, more than four times its loss from a year ago. Gross margins fell as well, as the retailer tried to clear out merchandise that consumers have shown no interest in.
All of these matrices were consistent with the first-quarter results that caused the departure of its last CEO Mark Tritton, and the installation of yet another management team charged with finding a way forward. In admitting things are bad—“our overall results are unacceptable,” is how interim CEO Sue Gove put it—the company tried to put some lipstick on this retailing pig with bits and pieces of less ominous news. It was a modest makeover, to be sure, but here are the highlights:
• Bad inventory levels are decreasing slowly but surely, even if these blow-out clearance sales put a hit on margins.
• Limited rollouts of new merchandise from national brands are showing encouraging results so far, even providing some positive comp numbers.
• The Welcome Rewards membership program added 1.3 million new members, taking the overall tally up to 6.4 million people. (In a rather unusual offer, Gove invited analysts on its call to join the program free of charge.)
• Vendors are offering “solid” support, no doubt because accounts payable activities have been more robust over the past 90 days.
• A new cross-brand mobile app will launch later this year that will unite all three of its nameplates—Bed Bath & Beyond, BuyBuyBaby and Harmon/Face Value—which should boost shopping activity across all banners.
• $30 million in new funding was secured after the sale of 3 million shares under a new stock offering announced this summer.
• Bed Bath retains about $850 million in cash and credit, which it says will be enough to sustain it until it reaches “break-even cash flow” by the fourth quarter.
Taken together, these are encouraging signs, albeit in the bigger picture of a retailer still struggling to regain its footing after nearly four years of losses—not to mention a top line that is barely half of what it was as recently as 2019.
More proof of Gove and her team’s strategy could come next month, when they are reportedly ready to open somewhere between five and 10 “test” stores with new merchandise setups in existing locations. Several vendors said they have been asked to supply product for these locations, which would show the future direction of the company. Bed Bath did not respond for comment on this report at press time.
With its fourth CEO in the past five years and plans for yet another reinvention of its stores in the works, Bed Bath & Beyond still has to get through at least a few more quarters of distress. In the meantime, the brand can only hope that its efforts will help close the gap between its optimistic outlook and reality.
Homepage photo: ©Simone/Adobe Stock
Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.