Bed Bath & Beyond interim CEO Mary Winston told analysts on Wednesday that the company expects to shutter 60 stores by the end of the fiscal year. This is an increase from the 40 stores it initially said it intended to close.
The company also reported second quarter net sales fell approximately 7.3% to $2.7 billion from $2.9 billion in the year-ago quarter. Comparable sales fell 6.7%.
Operating loss was $182.3 million from a profit of $78.9 million a year ago. Net loss was $138.8 million from a profit of $48.6 million in the year-ago quarter.
Bed Bath & Beyond's 6.7% slide in same-store sales — which CFO Robyn D'Elia told analysts "reflected a decrease in the number of transactions in stores, partially offset by an increase in the average transaction amount" — marks the 10th consecutive quarter of declines in that measure.
However, Winston remained optimistic in the company's four-part turnaround plan, which includes reviewing its current assets and evaluating outside interest in "several" of its brands. In April shareholders urged the company to sell its underperforming assets, including Cost Plus World Market, PersonalizationMall and Christmas Tree Shops. Wedbush analyst Seth Basham said the company's real estate and non-core assets are worth $1.7 billion, and Cost Plus World Market could be worth approximately $250 million.
Basham on Monday upgraded the New Jersey-based home goods retailer from "neutral" to "outperform" noting that "we see a good chance of stabilization — if not growth — in earnings over the next two years as sweeping changes take hold."
Additionally, Winston noted on the call with analysts that as a result of its fleet optimization, the company will close an additional 20 stores over its initial announcement of closures. In all, the company intends to close 40 Bed Bath & Beyond locations and 20 locations from its other banners. "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," she added.
But the turnaround's slow pace to show material benefits appeared to raise concern for Wells Fargo analysts. "We believe Q2 results were a clear reminder that BBBY's turnaround has yet to yield material signs of improvement," according to Wells Fargo analysts led by Zachary Fadem. "Thus far, these initiatives are driving widening comp declines, fewer coupon redemptions and a negative inflection in online sales. In our view, these attributes are indicative of a business clearly lacking direction, with few fundamental positives for bulls to hang their hats on."
Winston, who took the helm as interim CEO after Steven Temares left Bed Bath & Beyond in May, said the company has made "substantial progress" in its search to find a permanent CEO and expects to make an announcement soon.