Bed Bath & Beyond (BBBY) reports Q3 2020 earnings miss

Bed Bath & Beyond shares tumbled Thursday, after the retailer reported a quarterly sales decline of 5% from a year earlier, citing the sale of noncore assets like Cost Plus World Market and ongoing store closures that are part of its bigger turnaround plans.

The stock was down more than 13% in premarket trading.

Same-store sales for its entire business, which includes Buy Buy Baby and Harmon Face Values, rose 2%, climbing for the second consecutive quarter. Digital sales soared 77% from a year ago, fueled by online growth of 94% at Bed Bath’s namesake banner.

Many Americans have been staying at home during the Covid pandemic, prompting them to do more cooking, cleaning, organizing and redecorating. Sales of home organization, kitchen food prep, bedding, bath and indoor decor represented two-thirds of Bed Bath’s total sales during the quarter, the company said.

Here’s how Bed Bath & Beyond did during its third quarter ended Nov. 28, compared with what analysts were expecting, based on Refinitiv data:

• Adjusted earnings per share: 8 cents vs. 19 cents expected
• Revenue: $2.62 billion vs. $2.75 billion expected

For the three-month period ended Nov. 28, Bed Bath reported a net loss of $75.44 million, or 61 cents per share, compared with a loss of $38.55 million, or 31 cents a share, a year earlier.

Excluding $86 million in one-time charges tied to losses on asset sales, restructuring and impairment charges, the company earned 8 cents a share. That was below the 19 cents per share that analysts were expecting.

Net sales fell 5% to $2.62 billion from $2.76 billion a year earlier. That also came in below the $2.75 billion forecast by analysts.

Same-store sales, which track sales online and at Bed Bath stores open for at least 12 months, were up 2%, boosted by online demand from shoppers. Bed Bath said it gained 2.2 million new digital customers during the quarter, with 36% of its digital sales fulfilled by stores. Sixteen percent of e-commerce purchases were picked up by customers in stores, it said.

“Once the election kicked in and and Covid started ramping up, customers had built the muscle and built the understanding of those [pick up] services, and quickly pivoted into them,” CEO Mark Tritton told CNBC. “Week by week this holiday season, we saw those rates increasing exponentially.”

As the big-box retailer works through hundreds of store closures, however, it’s likely going to take more time for Bed Bath’s turnaround plans to translate into sustainable growth — growth that lasts beyond the boost it has experienced during the pandemic. In July, the company said it was aiming to shut roughly 200 locations — many of those Bed Bath stores — by 2022. It’s in the process of closing more than 40 stores this year.

Bed Bath announced Thursday it’s calling for same-store sales during its fiscal fourth quarter to be about in line with a year earlier. Net sales are estimated to be lower by a double-digit percentage, due in part to ongoing closures, the company said….