Bed Bath & Beyond on Wednesday reported third quarter net sales decreased 9% to $2.8 billion from $3 billion in the year-ago period, while comparable sales decreased 8.3%.
The company swung to a loss, reporting an operating loss of $29.8 million from a profit of $49.5 million a year ago. Net loss was $38.6 million from a profit of $24.4 million in the year-ago quarter, according to a company press release.
Bed Bath & Beyond expects sales and profitability to continue to be pressured heading into Q4, prompting the retailer to withdraw its fiscal 2019 full-year outlook. The company also said it plans to delay the closing of 20 Bed Bath & Beyond stores that were expected to close by the end of the fiscal year to help with an inventory reduction initiative.
Bed Bath & Beyond swung to a quarterly loss in the third quarter and missed analysts expectations on revenue, driving shares down as much as 20% on Wednesday, according to MarketWatch.
"Let me be clear, these results are unsatisfactory and underscore the imperative to change and strengthen our sense of priorities and purpose," CEO Mark Tritton said on an earnings call with analysts, according to a Seeking Alpha transcript. "We must respond to the challenges we face as a business, including pressured sales and profitability, and reconstruct a modern, durable model for long-term profitable growth."
Tritton, who most recently served as Target's chief merchant, has extensive experience leading retail turnarounds. At Target, he helped to build a retail model that ensured long-term relevancy among consumers and profitability growth. At both Nordstrom and Target, he also oversaw private labels — something Bed Bath & Beyond is attempting to leverage in its transformation efforts.
And while Tritton arrived at the troubled home goods retailer just over two months ago, he hasn't wasted any time in rolling out turnaround initiatives. On Monday, Bed Bath & Beyond completed a sale-leaseback transaction, which entails selling about 2.1 million square feet of its real estate — including retail stores, a distribution facility and office space — to a private equity firm. The deal is expected to generate more than $250 million, which the company said it will use to benefit its transformation efforts, fund share repurchasing and reduce its nearly $1.5 billion worth of debt. Bed Bath & Beyond also recently announced six senior-level executives would be exiting the company, including the chief merchandising officer, chief marketing officer and chief digital officer.
"We will be putting a team in place that will not only have the right talent and expertise to execute our new vision and inject new ideas, but also the right organizational structure to facilitate more streamlined decision making to accelerate the pace of transformation and to re-establish Bed Bath & Beyond's authority in the home space," Tritton said on Wednesday.
While overall third quarter comps sunk more than 8%, the company reported strong Cyber Week results. During the five-day period from Thanksgiving to Cyber Monday, Bed Bath & Beyond's comp sales on a shifted basis increased some 7.1%, including growth in stores of 5% and growth in digital of more than 13%, CFO Robyn D'Elia told analysts.
This, according to Wedbush analyst Seth Basham, indicates Bed Bath & Beyond "has the potential to drive traffic and sales growth in future," he said in an emailed client note to Retail Dive.
The company on Wednesday also said it plans to delay the closing of 20 Bed Bath & Beyond stores that were expected to close by the end of the fiscal year. These closings are part of an initiative previously announced by then-CEO Mary Winston, which includes shuttering 40 Bed Bath & Beyond stores and 20 locations from its other banners.
"The transformation will be neither easy nor linear, but we believe the company has a better chance of success than most given its venerable new leadership (with more executive hires to come), board support and engagement, strong cash flow and solid balance sheet," Basham said.