Bed Bath & Beyond posted a surprise loss in the fourth quarter amid supply chain bottlenecks that led to inventory issues during the crucial holiday period.
The home goods retailer estimated that a lack of in-stock availability across its Bed Bath & Beyond banner led to a shortfall of around $175 million in fourth quarter sales, or a high single-digit deficit. (In the third quarter, the company said supply chain challenges cost it about $100 million.)
“Macroeconomic factors, such as global supply chain disruption, the Omicron variant, as well as geopolitical turmoil weighing on consumer confidence, revealed more vulnerabilities than we could have anticipated at this stage of our transformation, as we completely rebuild the foundations of our business,” said Bed Bath & Beyond President and CEO Mark Tritton.
Despite the challenges, some of which have continued into the current quarter, Tritton said it is confident the retailer’s transformation, which emphasizes own brands, renovated stores and digital investments, is making progress.
“Fiscal 2021 was a year of rebuilding in the face of significant industry and operational headwinds in the first year of our transformation,” he said. “While our operational execution may have thwarted our short-term efforts, we also remain focused on our long-term strategy and transformation.
More recently, the company entered into a “cooperation agreement” with activist Ryan Cohen, founder of Chewy and chairman of Game Stop, whose investment firm RC Ventures holds a 9.8% stake in Bed Bath & Beyond. Three of RC Ventures’ Designated Directors will join the Bed Bath & Beyond board and company will explore alternatives for its Buybuy Baby business.
The home goods retailer reported a net loss of $159.1 million, or $1.79 per share, in the quarter ended Feb. 26, compared to net profit of $9.1 million, or $0.08 per share, at the same period of the previous year. The adjusted loss per share was $0.92, excluding analyst estimates of $0.03 per share.
Sales fell 22% to $2.051 billion from $2.619 billion last year, missing estimates of $2.075 billion. Digital sales fell 18% from the prior year period, partly reflecting the return to stores and the normalization of e-commerce levels.
Comparable sales fell 12%, impacted by supply chain disruptions and inventory issues, the company said. Same-store sales were down 15% for the company’s Bed Bath & Beyond banner and posted low-single-digit growth for the BuyBuy Baby brand.
“The lack of inventory available for sale has proven to be an ongoing impediment to sales through the remainder of the fourth quarter and into fiscal 2022,” Tritton said. “Specifically, despite our overall inventory levels, product in transit, not available for sale or held in port remained abnormally high, particularly for key items.”
The company’s Buybuy Baby banner reached $1.4 billion in sales for the year, recording double-digit growth. The company expects sequential comp sales growth in the second half of fiscal 2022 as supply chain conditions improve.
“Our Buybuy Baby and Harmon banners demonstrate our ability to achieve stabilization and growth when there is strength in the face of macroeconomic factors given its domestic supply chain, as well as demand for different key products such than apparel and equipment versus our Bed Bath banner,” Tritton added.
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Bed Bath is undertaking a complete overhaul of its supply chain to better manage its imported goods and get them to distribution centers and stores
“As we move forward into 2022, the investments we are making in our supply chain and technology base are designed to significantly improve our skills, enabling us to overcome the kinds of challenges we currently face,” said Triton.
From November 27, 2021the company had a total of 995 stores, of which 809 Bed bath and beyond stores in all 50 states, the District of Colombia, Porto Rico and Canada, 133 Buybuy Baby stores and 53 stores under the Harmon, Harmon Face Values or Face Values banners. The company is a partner in a joint venture that operates 10 stores in Mexico below Bed Bath & Beyond Banner.