Bed Bath & Beyond signaled turbulence in the months ahead. It’s already seeing a sales slump at its stores as shoppers struggle to find what they need there, and it anticipates that customers will continue to pull back their spending.
The home goods chain on Wednesday said sales plunged 22% in its fourth quarter ended March 31. Shares of Bed Bath & Beyond fell about 1% Wednesday.
The retailer blamed the drop on a mix of challenges that have cooled momentum at its stores, including products stuck at ports and ongoing supply chain holdups that created shortages of key items.
“We’re seeing an emerging uncertainty related to consumer sentiment based on market and retail indicators that show a distinct slowdown in consumer demand,” Gustavo Arnal, Bed Bath & Beyond’s chief financial officer, said in a call with analysts Wednesday.
Sales at stores open at least a year, have fallen 20% so far in the the company’s current quarter.
“We anticipate many of the operating dynamics we experienced in the fourth quarter, both industrywide and internal, to continue in the first quarter,” he said during the call.
Bed Bath & Beyond’s CEO Mark Tritton said the unavailability of certain products resulted in about $175 million of lost sales during the period, and that the retailer can’t deliver on major items advertised in its circulars. He added that the company continues to experience high freight and shipping costs tied to ongoing global supply chain problems.
Weddings are a rare boost
If there is a bright spot, said Tritton, it is the company’s wedding and baby categories.
The wedding industry is projecting a boom in 2022, with as many as 2.6 million weddings expected to take place this year, up from 2.2 million in 2019, prior to the pandemic.
A banner year for weddings will be welcome relief not just for brides and grooms, but for the entire industry and the retailers who cater to it and rely on it for revenue. The nightmare year of 2020 forced the cancellation or delay of a majority of weddings, and scores of businesses that rely on them for revenue were left struggling to survive.
Bed Bath and Beyond is a popular destination for wedding registries.
Tritton said during the call that the company is seeing an uptick in its wedding and baby business. (The company also operates baby goods chain buybuy Baby).
“I think that we see upward trends in wedding that everyone’s expecting and want to capitalize on that. So early indicators through the back end of Q4 on bodes well,” Tritton said.
Bed Bath & Beyond has caught the attention of activist investor Ryan Cohen, who wants to shake things up at the company.
His RC Ventures bought a nearly 10% stake in Bed Bath & Beyond (BBBY) on March 6, making the investment firm a top-five shareholder. Cohen has criticized the company’s current strategy and urged it to make changes.
Cohen, who also founded online pet retailer Chewy, wrote that Bed Bath & Beyond is trying to implement too many “cumbersome” plans at once and instead should “narrow its focus” to priorities, such as improving its supply chain and merchandise mix. He recommended the company consider spinning off its buybuy Baby stores or even look to find a buyer to take the whole company private.
Bed Bath & Beyond “is struggling to reverse sustained market share losses, stem years-long share price declines and navigate supply chain volatility,” Cohen recently wrote to the board, adding that company leaders’ “outsized” financial compensation did not match the company’s performance.
Bed Bath & Beyond responded to Cohen that it will “carefully review” his letter and “hope to engage constructively around the ideas” he proposed.
On March 25, the company struck a deal with Cohen’s firm, RC Ventures, saying in a release that three people from RC Ventures would immediately join Bed Bath & Beyond’s board of directors as independent directors. It also said a committee would explore alternatives for the buybuy Baby chain and forward recommendations to the board.
– CNN Business’ Nathaniel Meyersohn contributed to this report