Bed Bath & Beyond’s Blockbuster Qtr. Increase profits, comps, online
Expanded e-commerce activity – up 89% – was again the hero this quarter for Bed Bath & Beyond, driving the specialty chain’s first increase in DIY store sales since the end of its 2016 financial year.
At the same time, the retailer saw improvements in several key metrics: gross margin, cash flow, adjusted EBITDA and, most importantly, net income, with net earnings per diluted share of $1.75 vs. a loss a year ago as well as losses over the past several quarters more recently. Adjusted net earnings per diluted share were $0.50, up 47% from a year ago.
“This quarter in total has proven the confidence we have in our plan,” CEO Mark Tritton said in an interview with Forbes.com. “We remain committed to this process.” He added that he was particularly pleased with the digital gains, which continued into the third quarter, with no loss in profitability. “It’s gratifying for us to see this growth.”
For Tritton, which celebrates its first anniversary next month, the performance should be encouraging, especially given the long string of bad news the retailer has struggled with over the past few years. These disappointing results prompted a massive change in the management and business focus of the company, of which Tritton’s appointment was a cornerstone.
Since then, he has recruited a new group of C-level executives as part of a major expansion of the company’s previously thin management level. He also moved quickly to update the retailer on its digital and omnichannel capabilities, including recent announcements to offer same-day delivery via Shipt and Instacart, as well as expanding its partnership with Google to use its services. Cloud for back office technologies. Tritton also announced the first 63 of what is expected to be a total of 200 store closures, mostly at its namesake banner. He said he remained committed to completing the full closing schedule by 2022.
Even with an overall 1% drop in net sales, the company beat most consensus estimates and attributed the drop in sales at least in part to the sale of its One Kings Lane business earlier in the year.
Still, there is a lot of work to be done. Offset store sales for its physical stores were down 12% as total store sales fell 18% for the quarter. Tritton said store renovations and reformatting were underway to address this decline and he confirmed that the Bed Bath test store in Watchung, New Jersey is a good indicator of the general direction that will take. stores. “We are very happy,” he said, with the results he sees from this place.
The retailer, which has made a more efficient and streamlined supply chain one of its main goals, has yet to make much visible progress on the initiative, but Tritton said BBB remains committed to “investing in genuine national brands and our own brands”. He said the retailer is currently going through a curation process to weed out secondary labels that don’t offer what he sees as true value and a compelling brand story for the customer.
Tritton’s overhaul of its senior management resulted in a “100% turnover of my direct reports”, he said, a task now complete. On the other side of the personnel coin, BBB has laid off about 4,000 employees in the past 10 months, resulting in an overhead savings of about $150 million. “We had a very bloated organization and we had to make tough decisions” about staff cuts, he said. The company said that apart from layoffs resulting from upcoming store closures, it has completed this series of staff movements.
Tritton said he believes the retailer is “prepared for a strong holiday season” and that its enhanced omnichannel capabilities – or what it calls “omni-always” capabilities – would be important factors in boosting its business at over the next 90 days. He agreed that the shopping season will start earlier than ever but ultimately “the customer will decide”.