Sales dropped almost 50% since the global pandemic temporarily closed Bed Bath & Beyond stores.
Bed Bath & Beyond Inc. said on Wednesday it would permanently close roughly 200 stores, over the next two years, starting later in 2020, as it works toward getting back to profitability against the backdrop of the coronavirus pandemic. However, during April and May, as consumers were stocking up on cleaning supplies and necessities, Bed Bath & Beyond’s online sales surged over 100%.
Bed Bath & Beyond said that 40% of those online orders came from customers who were new to its online platform, and about 10% came from shoppers who had never tried the brand. That suggests there’s still a draw for its offerings that span popular home furnishings categories.
The company operates roughly 1,500 stores and had to shut many of its locations in March because of Covid-19 restrictions in the United States. Despite the jump in online sales, the company’s overall revenue for the quarter ended May 30 plunged 49% to $1.31 billion.
The decline was in line with the quarterly drops reported by Kohl’s Corp., TJX Cos., and other rivals during the period. Unlike those chains, Bed Bath & Beyond was struggling to draw shoppers and boost sales before the pandemic upended shopping habits and the U.S. economy.
Bed Bath & Beyond – which also owns the chains Buybuy Baby, Christmas Tree Shops, and Harmon Face Values – predict that the closures will save annual costs of between $250 billion to $350 billion, excluding related one-time costs.
In terms of financials, Bed Bath & Beyond’s adjusted loss per share was at $1.96 with a revenue of $1.31 billion during its fiscal first quarter ending May 30. The Union, N.J., company said its net loss narrowed to $302.29 million, or $2.44 per share, from $371.09 million, or $2.91 a share, a year ago. Gross margins dropped almost 8 percentage points, in part due to the company selling more online, which comes with higher fulfillment and shipping costs.
According to Chief Executive Mark Tritton, as stores are reopening, many are outperforming the initial expectations. Consumers have shifted from stocking up on essential home supplies like water, cleaning supplies, and coffee, to bigger-ticket items like home decor, bedding, and accessories for the backyard.
The company has been selling assets to raise cash for its turnaround efforts. In January, it signed a deal to sell roughly half of its real estate to a private-equity firm and lease back the space. In April, it sold its One Kings Lane e-commerce site for an undisclosed amount. Yet, unfortunately, the company has now made a loss for six consecutive quarters. Its shares, already down almost 40% year to date, fell by another 8% after hours.
Bed Bath said Wednesday that it believes it has a “strong financial position” to manage through the crisis. Executives said after ending the May quarter with about $1.2 billion in cash, they secured a new $850 million asset-backed credit line.
“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,” said Mark Tritton. “We believe Bed Bath & Beyond will emerge from this crisis even stronger.”