Bed Bath & Beyond on Thursday reported a third-quarter net sales decline of 5% year over year to $2.6 billion. The company attributed the drop to the sale of non-core banners, like Cost Plus World Market, and store closures as part of Bed Bath & Beyond's store optimization effort.
The retailer's comparable sales in the quarter rose 2% — its second consecutive quarter of growth in that measure — according to a company press release. Its digital sales shot up some 77%.
Bed Bath & Beyond's third-quarter operating loss widened to $122.8 million from $29.8 million a year ago. Net loss also grew to $75.4 million from $38.6 million in the year-ago period.
Bed Bath & Beyond executives on Thursday touted comp sales increases and market share gains at a time when many in the industry have been particularly hard hit by the pandemic.
The home sector has been among the few beneficiaries of the past year as consumers spent more time in their households. Bed Bath & Beyond saw market share gains in the bed category "with improving trends in both bath and kitchen categories," CEO Mark Tritton told analysts Thursday, citing data from The NPD Group.
However, the company's overall figures "fall well short of total growth in the homewares market so, while the company is performing better in some individual categories, it is still losing share in the homewares market overall," GlobalData Managing Director Neil Saunders said in emailed comments. He added that given the unique circumstances of the pandemic, the gains experienced right now may be the result of consumers actively seeking out products to outfit their homes rather than from changes Bed Bath & Beyond has made. "This means that once the music of elevated homewares growth stops, Bed Bath & Beyond's performance could come crashing back down," Saunders said.
And while the company grew its same-store sales in the quarter — driven by a strong performance from its namesake banner, which posted a 5% comps increase — its revenue continued to decline at a time when others in the space saw significant gains. At Home reported third-quarter net sales increased 47.5% year over year to $470 million, while Wayfair's direct retail revenue grew 66% in the same period to $3.8 billion.
Despite headwinds brought on by the pandemic — lower foot traffic, shipping capacity constraints and higher freight costs — Bed Bath & Beyond has continued on with its turnaround efforts. The retailer has sold off several of its non-core assets, including Cost Plus World Market and Christmas Tree Shops, and reduced its store footprint to help steer the company back on track. Bed Bath & Beyond said it accelerated the pace of store closures from 70 to 120 closures by the end of fiscal 2020 and is on track to close 200 by fiscal 2021.
The significant, long-term impacts of the plan will take time and money to develop — something Bed Bath & Beyond doesn't have an abundance of as it continues to notch losses, Saunders said. "While we believe that the trajectory is right, we do not believe current results represent a win for the new strategy," he added.