The home goods chain said on Wednesday that sales fell 22% in the fourth quarter ended March 31. Bed Bath & Beyond (BBBY) shares fell about 1% on Wednesday.
The retailer blamed the decline on a number of challenges that have cooled momentum at its stores, including products stuck in ports and ongoing supply chain delays that caused shortages of essential items.
“We see an emerging uncertainty surrounding consumer sentiment based on market and retail indicators showing a significant slowdown in consumer demand,” Bed Bath & Beyond (BBBY) chief financial officer Gustavo Arnal said in a talk with analysts on Wednesday.
Sales at stores open for at least a year are down 20% so far in the company’s current quarter.
“We expect many of the operating dynamics that we experienced in the fourth quarter, both industry-wide and internally, to continue in the first quarter,” he said during the earnings call.
Mark Tritton, CEO of Bed Bath & Beyond, said the unavailability of certain products resulted in approximately $175 million in lost sales during that period and the retailer was unable to ship key items advertised in its newsletters. He added that the company continues to face high freight and shipping costs due to ongoing global supply chain issues.
Weddings are a rare celebration
If there’s a bright spot, Tritton said, it’s the company’s wedding and baby categories.
The wedding industry is predicting a boom in 2022, with up to 2.6 million weddings to take place this year, up from 2.2 million in 2019 before the pandemic.
A great year for weddings will be a welcome relief not just for brides and grooms but for the entire industry Retailers who care and rely on it to generate revenue. The nightmare year of 2020 forced the cancellation or postponement of most weddings, and numerous businesses that rely on their revenue have struggled to survive.
Bed Bath and Beyond is a popular destination for wedding registers.
Tritton said during the call that the company is seeing an uptick in its wedding and baby business. (The company also operates a baby supply chain buy, buy, baby).
“I think we’re seeing upticks in weddings that everyone is expecting and want to capitalize on that. So leading indicators through the end of the fourth quarter are boding well,” said Tritton.
activist action
Bed Bath & Beyond has caught the attention of activist investor Ryan Cohen, who wants to shake things up at the company.
His RC Ventures acquired a nearly 10% stake in Bed Bath & Beyond (BBBY) on March 6, making the investment firm one of the top five shareholders. Cohen has criticized the company’s current strategy and called for changes.
Cohen, who also founded online pet retailer Chewy, wrote that Bed Bath & Beyond is trying to take on too many “awkward” plans at once and should instead be “narrowing down” on priorities like improving supply chain and merchandise mix. He recommended the company spin off its Buybuy baby stores or even look for a buyer to privatize the entire company.
Bed Bath & Beyond “struggles to reverse sustained market share losses, stem years of share price declines and manage supply chain volatility,” Cohen recently wrote to the board, adding that the “outsized” financial compensation paid to company executives was inconsistent with the company’s performance .
Bed Bath & Beyond responded to Cohen that it will “review his letter carefully” and “hope to constructively address the ideas he proposes.” Three individuals from RC Ventures would immediately join the Board of Directors of Bed Bath & Beyond as independent directors. It also said a committee would examine alternatives for the buybuy baby chain and would forward recommendations to the board.
— Nathaniel Meyersohn of CNN Business contributed to this report