The numbers were terrible, worse than expected. Losses piled up and the impact on business wiped out by lack of merchandise on the selling floor was devastating. And there were few new initiatives announced that might improve things.
But there was good news this morning when Bed Bath & Beyond reported its third quarter financial results: It did not file for bankruptcy. At least not yet.
The drama of today’s release was tempered by the company’s preview of its results a few days ago, so there were no shocks in its official report. Still, the numbers were tough to take, especially as they were lower than Wall Street expectations:
• Sales declined 33% overall, based on a 32% comp store decline and 34% at Bed Bath stores. The BuyBuyBaby division only slightly performed better but still had a top line drop in “the low-twenties” range.
• The net loss was just shy of $400 million, versus an already miserable $276 million loss a year ago. For the first nine months of its fiscal year, BBB has lost just over $1.1 billion.
• Overall sales were impacted by the retailer’s inability to get enough merchandise to sell and fewer shoppers in its stores. It said its “Sales performance (was) driven by lower in-stock position of approximately 70% and decrease in customer traffic.” Placer.ai, the foot traffic research company, has reported that visits by shoppers were off by 23% in November compared to a year ago and that it got worse in December, with a 26.5% fall-off. These third quarter results announced today only cover the period through the end of November and the Placer numbers would seem to indicate that the downward trend is continuing into the fourth quarter.
On its call with analysts this morning, Bed Bath did announce a few tidbits of additional efforts to try to reverse this massive slide. CEO Sue Gove said the retailer was initiating another $80 to $100 million in cost savings on top of the lower SG&A spending it has already achieved. She said the store closing process is on schedule to shutter 150 locations by the end of its 2022 fiscal year later this winter and that it was working down inventory levels of its store brand inventory. Where it was able to get new national brands goods it had better sales results, she said.
Still, the news this morning was pretty bad, reflected in the fact that the company took the unusual step of not taking any questions from analysts on its call. Back in the day when BBB was flying high it often did not answer analyst questions on its calls but clearly this time the circumstances were very different.
Gove did not directly address the issue of any potential bankruptcy filing, only saying “As we shared last week, we continue to work with advisors as we consider all strategic alternatives to accomplish our near- and long-term goals.” Reuters reported last week that BBB was “considering skipping its debt payments due on Feb. 1 in an effort to conserve cash ahead of a possible bankruptcy filing.” In its consolidated balance sheet filing the company said it has about $226 million in cash and cash equivalents on its books, compared to $540 million a year ago. Its total long-term debt has reached $1.93 billion, versus $1.17 billion a year ago.
Gove, in making her remarks in the earnings statement, said the company continued to have “concrete advantages” in the marketplace. Given the sinking properties of concrete she might have considered a different metaphor.
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