Bed Bath & Beyond stock is dropping on Wednesday morning, after the home goods retailer reported a surprise loss in its fiscal fourth quarter on light sales. The chief executive officer says operational improvements are coming, although he’s aware they haven’t happened quickly enough to offset inventory bottlenecks.
Bed Bath & Beyond said it lost an adjusted 92 cents a share on revenue that slipped 22% year over year to $2.05 billion. Consensus estimates called for a per-share profit of three cents on revenue of $2.08 billion.
Same-store sales were down 12%, as comps at its flagship Bed Bath locations were off 15% while buybuy Baby notched a low-single-digit increase. Analysts were looking for an 8.5% decrease in same-store sales.
Bed Bath & Beyond stock was down nearly 7% in premarket trading.
CEO Mark Tritton said that inventory and supply chain challenges were at the epicenter of the company’s issues this quarter. He notes that some 30% of inventory wasn’t available to sell, as it was trapped upstream in ports and distribution centers—a frustrating situation for management and customers.
Tritton joined Bed Bath in late 2019 after activist investors pushed for change amid mismanagement steps, and has implemented a number of changes at the company. And while these changes have improved Bed Bath’s operations, he notes the company hasn’t had enough time to fully complete its transformation, which left it vulnerable to the supply-chain problems that have been plaguing the industry. “If we were a year ahead, we’d be in a different place, but we’re not; we’re at this early stage, and that’s our current reality.”
Nonetheless, he says that the company is moving swiftly and has met its internal goals, especially on the technology front. That includes a centralized data hub due to come online at the end of the month, which will allow the company to more effectively track all its products from transit to store. Bed Bath has also made big investments in supply chain infrastructure, opening new regional distribution centers on the East Coast, with a second major center on the west coast slated for later this year.
Still, Tritton acknowledges that while these key changes are happening, Bed Bath hasn’t “seen the green shoots, and we’re aware investors haven’t seen them either.” However, while the first quarter might have been a “perfect storm” in terms of supply chain and transit woes, he says that the company’s transformation is on track. “We’re not there yet, but I believe we will get there, and I believe we’ll have sequential improvement” later this year from sales to margins and inventory.
Looking ahead to the full fiscal year, the company’s forecast calls for sequential comp improvement in the second half of the year as supply chain conditions ease, as well as modest year-over-year gross margin expansion. These metrics should support higher earnings before interest, taxes, depreciation, and amortization in the second half.