Bed Bath & Beyond on Thursday reported its first same-store sales increase in nearly four years, as its online business surged more than 80% during the quarter, as shoppers stocked up on disposable face masks, college dorm decor and patio furniture.
Its shares skyrocketed more than 18% in premarket trading.
The company said it saw 2 million new customers during the period, many of them younger and spending more money per trip. The sales gains, plus lower spending on promotions and the use of its stores to fulfill more online orders, helped swing the company to a profit.
“When home is everything, we’re really poised to be the epicenter of that,” CEO Mark Tritton said in an interview with CNBC. “We were agile about getting after that.”
Here’s how the company did during its fiscal second quarter ended Aug. 29 compared with what analysts were expecting, based on Refinitiv data:
- Earnings per share: 50 cents, adjusted, vs. a loss of 23 cents, expected
- Revenue: $2.69 billion vs. $2.60 billion, expected
The company said net income rose to $217.9 million, or $1.75 per share, from a loss of $138.8 million, or $1.12 per share, a year ago. Excluding one-time items, the company earned 50 cents per share, ahead of expectations for a loss of 23 cents.
Net sales fell about 1% to $2.69 billion from $2.72 billion a year earlier but were better than the expectations of $2.60 billion.
Same-store sales rose 6% — its first quarter of growth in the category since the fourth quarter of fiscal 2016. Analysts had been calling for a decline of 2.1%, according to FactSet. Online sales helped drive the gains, with digital comparable sales surging roughly 89%, Bed Bath & Beyond said. Same-store sales at its stores were down 12% year over year.
Bed Bath & Beyond is not offering a full-year outlook but said same-store sales for September trended positive, with similar store and digital sales patterns compared with the second quarter.
Earlier this week, the retailer announced its nationwide rollout of same-day delivery, just in time for the busy holiday season, through a partnership with Shipt and Instacart.
The debut comes after Bed Bath & Beyond earlier this year launched a buy online, pick up in store option, and contactless curbside pickup during the coronavirus pandemic, as shoppers have been flocking to its websites for hand sanitizers, bread makers and diapers.
Under Tritton, who joined Bed Bath & Beyond in November from Target, the big-box retailer has been bulking up its management team, but it has cut jobs during the pandemic and is planning to close some stores to get rid of unprofitable shops.
Analysts have turned more optimistic about Tritton’s plans, which include investing more in private label. But the company also is reaping the benefits of more people sprucing up their homes during the pandemic.
The company, which as of Aug. 29 had 1,476 stores, plans to close roughly 200, mostly Bed Bath & Beyond, locations over the next two years. Sixty-three stores are shutting during the third quarter. It said those 200 stores generated roughly $1 billion in annual net sales in fiscal 2019, but it hopes to move at least 15% to 20% of those dollars online or to other stores.
According to Tritton, the company is seeing momentum as some other retailers in the home category, like Pier 1 Imports, have filed for bankruptcy and closed stores in 2020.
“Customers are looking for alternatives for where they used to shop,” he said. “There are key categories where we are seeing strength,” including baby, he said.
Still, Bed Bath & Beyond must compete with Amazon, Walmart and Target, which have spent years pouring money into their e-commerce operations and, in the case of Walmart and Target, sprucing up stores.
Bed Bath & Beyond is expected to host a virtual investor meeting on Oct. 28, where it will share more about its turnaround plans and financial outlook.
As of Wednesday’s market close, its shares are down about 14% this year, giving the company a market cap of $1.9 billion.
Find the full earnings press release here.