That could be a troubling harbinger for the U.S. retail industry going into the busiest shopping period of the year and serve as a bellwether for what companies such as Walmart and Target may see as they try to get more shoppers into stores.
And the third quarter is already off to a bad start for Bed Bath & Beyond, Tritton said, adding that November "is the largest and most impactful" of that three-month period. November historically represents nearly half the sales for the third quarter because it includes the Thanksgiving sales period, namely Black Friday, according to Chief Financial Officer Gustavo Arnal.
Tritton blamed macroeconomic conditions and internal execution factors for the "choppy" second quarter.
"External disruptive forces such as the resurgence of COVID-19 cases and growing delta [variant] fears created a challenging and volatile environment," Tritton said. "This is particularly evident in large Southern states such as Florida and Texas as well as California, which in aggregate represent approximately 30% of our total sales. From July to August, traffic trends devolved in these states and worsened by double-digit percentages."
Bed Bath & Beyond was also plagued by industrywide supply-chain issues, which included higher freight costs and merchandise shortages, according to Tritton. And sales for categories that boomed a year ago when people were homebound in the pandemic — such as bedding and kitchenware — were down this year compared to those 2020 numbers.
In light of what happened, Bed Bath & Beyond slashed its fiscal 2021 outlook, now projecting sales of $8.1 billion to $8.3 billion, down from $8.2 billion to $8.4 billion, Arnal said. Guidance on comparable sales for the second through the fourth quarter is that they will be flat to slightly positive, instead of seeing low-single-digit growth, according to Arnal.
Sales DropThe Union, New Jersey-based home goods retailer, with stores under various banners, saw its net sales drop 26% to $1.98 billion in the quarter ended Aug. 28. Comparable sales dropped 4% at the chain's flagship, Bed Bath & Beyond, compared to the prior-year period. Buy Buy Baby, with merchandise focused on infants and young children, fared better, with its comparable sales for the quarter seeing percentage growth in the mid-teens.
Revenue growth was also hurt by the company's reduction of print circulars — with their trademark 20% off coupons that bring customers to shop online and in stores, Tritton said. "We disproportionately reduced the distribution of our printed circulars, which are a continuous and critical store and digital traffic driver for our Bed Bath & Beyond business," he said.
As part of a turnaround strategy that Tritton is spearheading, Bed Bath & Beyond is downsizing its fleet of brick-and-mortar locations and is still on track to shut 200 stores by the end of this fiscal year. The retailer now has remodeled, by uncluttering, about 70 stores out of its planned 130 to 150 for 2021, and they are performing ahead of plan, Tritton said. In July, Bed Bath & Beyond reopened its revamped flagship in New York.
"Our Chelsea store [in Manhattan] serves as a beacon for the overall redefinition of the new Bed Bath & Beyond. ... It is now our most productive store in the chain per square foot," Tritton said. The retailer opened a Northeast regional distribution center in September, according to Tritton. It is at the site of the former Schuylkill Mall in Frackville, Pennsylvania, which was demolished and replaced by a 1 million-square-foot industrial property that NorthPoint Development built.
Bed Bath & Beyond has 813 Bed Bath & Beyond stores in North America, 132 Buy Buy Baby stores and 54 stores under the names Harmon, Harmon Face Values or Face Values. During the second quarter, the company shuttered five Bed Bath & Beyond stores.
Source: CoStar Group, www.costar.com