NEW YORK - Things have gone from bad to worse for New Jersey-based Bed Bath & Beyond.
The home-goods retailer lost $38.6 million, or 31 cents per share, in its fiscal third quarter and warned that its sales and profitability will remain under pressure for the rest of the year. Shares plunged following the report.
“Our performance in the third quarter was unsatisfactory and underscores the imperative for change and strengthens our sense of priorities and purpose,” Bed Bath & Beyond CEO Mark Tritton said in a statement. “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.”
Bed Bath & Beyond has struggled to keep up with a changing retail landscape that has seen more consumers shopping online. The retailer’s market capitalization has fallen from a peak of $17.35 billion in June 2012 to below $2 billion on Thursday.
Bed Bath & Beyond’s third-quarter sales fell 9 percent from a year ago to $2.76 billion, missing the $2.85 billion that analysts surveyed by Refinitiv were anticipating. Comparable sales declined for an 11th straight quarter, falling 8.3 percent year-over-year, which was worse than the expected 5 percent drop.
The company said its results were “significantly impacted” by a calendar shift that resulted in one less week of holiday sales. Adjusted for the change, comparable sales were down 3.6 percent.
Tritton was named president and CEO at Bed Bath & Beyond in October after Steven Tamares stepped down from his post following pressure from activist investors. He has been tasked with “accelerating the company’s ongoing business transformation.”
On Monday, Bed Bath & Beyond announced the completion of a sale-leaseback transaction of about 2.1 million square feet of commercial real estate, netting $250 million.
The retailer, which also owns buybuy Baby, Harmon Face Values, World Market and others announced in October that it would close 60 stores, 40 of which would be marquee sites. The company has about 1,500 locations in total.
The details of its go-forward strategic plan are still being finalized, Bed Bath & Beyond said Thursday.
“We expect the new board and management team to find assets to monetize, like property; non-core businesses to sell, most likely Personalization Mall and/or World Market; costs to cut -- in the hundreds of millions of dollars, and merchandising and sourcing opportunities,” Bradley Thomas, analyst at KeyBanc Capital Markets, wrote in a note to clients on Thursday.
He added that while competition “remains intense,” there are “more reasons for incremental enthusiasm in the business than downside risk.”
Thomas has an “overweight” rating and an $18 price target – 19.5 percent higher than where shares opened Thursday.