Bed Bath & Beyond reported better-than-expected sales and earnings for its fourth quarter but it didn’t offer an outlook for the current year due to the COVID-19 pandemic.
“The duration and extent of the pandemic is highly uncertain, and Bed Bath & Beyond’s results could be impacted in ways that are difficult to predict today,” the company said in its earnings release. (Bed Bath & Beyond’s fourth quarter ended before the pandemic started.)
The struggling home goods retailer emphasized that it has the financial capability to make key investments in e-commerce, and will be introducing more buy-online-pick-up-in-store options, noting on an earnings call with analysts that its digital business surged in April. The company has temporarily closed all its stores with the exception of about 170 buybuy Baby and Harmon locations.
“All four of our e-commerce fulfillment centers are currently operating,” Mark Tritton, president and CEO, said on the call. “And by the end of this week, we will have converted approximately 25% of our Bed Bath & Beyond and buybuy Baby stores in the U.S. and Canada into regional fulfillment centers to use our vast inventory resources to assign orders locally and deliver quickly.”
The company said that it plans to cut back discretionary expenses such as business travel and advertising, and costs related to the maintenance of closed stores. It also is postponing its store remodeling plans to 2021.
“Under the current business environment, we have modified our capital investments, but will continue to invest with confidence where it matters most,” Tritton said on the call. “We now plan to invest about $250 million, focusing on our core business and key projects that support the omnichannel future of our company in 2020 and beyond, which are more relevant than ever such as our digital and omni fulfillment capabilities, including BOPIS, curbside pickup, omni-inventory management as well as digital marketing and personalization.”
Bed Bath & Beyond posted a net loss of $65 million, or $0.53 per share, in the quarter ended Feb.29, compared with a loss of $254 million, or $1.92 a share, a year ago. Excluding one time items, the company earned $0.38 per share, beating the $0.20 analysts were expecting.
Revenue dropped 6.1% to $3.1 billion, slightly better than what analysts were anticipating. Overall same-store sales fell 5.6%. Same-store sales at brick-and-mortar stores were down 10%. Online sales surged 16%. Bed Bath & Beyond’s net sales for the full fiscal year fell 7.2% to $11.2 billion. Comparable sales declined 6.8%.
The company ended fiscal 2019 with approximately $1.4 billion in cash and investments, an increase of approximately 39% compared with the year-ago period.
Citing the uncertainty of the COVID-19 pandemic, Bed Bath & Beyond said it wouldn't provide profit guidance for the current fiscal year as stores remain closed in the U.S. and Canada. It also suspended plans to spend $600 million on share buybacks, dividends and debt reduction.
"Our fourth quarter performance was consistent with the market update we provided on February 11, 2020," stated Mark Tritton, Bed Bath & Beyond's President and CEO. "These results strengthen our resolve to continue to make the necessary, bold and broad-based changes needed to modernize our business, and give us confidence about our ability to improve on this quarterly performance."
The company's first quarter and full-year 2020 results will be unfavorably impacted by the COVID-19 pandemic. The duration and extent of the pandemic is highly uncertain, and Bed Bath & Beyond's results could be impacted in ways that are difficult to predict today. Due to the level of market uncertainty, the company will not provide further financial guidance for fiscal 2020 at this time.
"We are executing a clear plan to manage our business efficiently and effectively through the coronavirus pandemic, prioritizing the health and safety of our customers and teams," Tritton said. "Our financial position and contingency plans will allow us to retain the financial flexibility to make targeted investments that will deepen our connection with our customers and rebuild our authority in the Home space. In this time when Home is even more central to our lives and being safe at home with family is essential, Bed Bath & Beyond takes on an even more important role supporting customers and their families by making it easy to feel at home."
As of February 29, 2020, the company had a total of 1,500 stores, including 976 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada, 261 stores under the names of World Market, Cost Plus World Market or Cost Plus, 126 buybuy BABY stores, 81 stores under the names Christmas Tree Shops, Christmas Tree Shops andThat! or andThat!, 53 stores under the names Harmon, Harmon Face Values or Face Values, and three stores under the name One Kings Lane.