Bed Bath & Beyond ramps up store closures; swings to Q2 loss
Bed Bath & Beyond reported mixed results for its second quarter and gave an update on its store closings and CEO search.
The home good retailer plans to close 60 stores by the end of fiscal 2019, executives said during its earnings call. The chain’s Bed, Bath & Beyond division will account for about 40 of the closings, with the remaining coming from its other banners which include Christmas Tree Shops, World Market, buybuy Baby, and others. Previously, Bed, Bath & Beyond estimated closing about 40 locations.
“With this action we are increasing the profitability of our remaining portfolio, and believe that our remaining fleet will benefit from our renewed focus on driving traffic and operating efficiency,” Mary Winston, interim CEO, told analysts on the call. Winston was appointed to the position in May, following the resignation of long-time chief executive Steve Temares, said the "fleet optimization" will “create a better balance between our physical and digital presence within the markets we serve.”
On the call, executives said has made “substantial progress” in its search for a permanent CEO, with an announcement expected soon.
Bed Bath & Beyond swung to a net loss of $138.7 million, or $1.12 a share, in the quarter ended Aug. 31, compared to a profit of $48.6 million, or 36 cents a share, in the year-ago period. Adjusted earnings, excluding costs related to “transformation” initiatives such as inventory write-downs and severance costs, came to 34 cents a share, exceeding Street estimates of 27 cents per share.
Sales fell 7.3% to $2.72 billion, slightly lower than expectations. Same-store sales fell 6.7%, which was more than the Street expected. It was the tenth consecutive quarter of same-store sales declines.
In recent months, the retailer has rolled out a number of initiatives to turn around and transform its ailing business, including a program to refresh160 Bed Bath & Beyond stores and remove excess aged inventory from its stores in advance of the holiday season. The inventory reduction is part of an "aggressive reduction" of up to $1 billion in inventory during the next 18 months. The company is reviewing and optimizing its store base.
"We are making good progress against our four key near-term priorities, including: (1) stabilizing sales and driving top-line growth; (2) resetting the cost structure; (3) reviewing and optimizing the company's asset base, including the portfolio of retail banners; and (4) refining our organization structure,” stated Winston. “Our second-quarter financial results reflect the relentless effort of our teams and our progress in driving the company's transformation efforts.”
As of August 31, 2019, the retailer had a total of 1,534 stores, including 993 Bed Bath & Beyond and 277 stores under the banners of World Market, Cost Plus World Market or Cost Plus. It also had 126 buybuy Baby stores; 81 stores under the names Christmas Tree Shops, and Christmas Tree Shops andThat!; 55 stores under the names Harmon, Harmon Face Values or Face Values; and two stores under the name One Kings Lane.