Bed Bath & Beyond (BBBY) is divided on supply chain issues

People leave a Bed Bath & Beyond store amid the coronavirus disease (COVID-19) pandemic in New York, Jan. 27, 2021.

Carlo Allegri | Reuters

Bed Bath & Beyond shares were down more than 25% in pre-trading on Thursday as the company said it saw a sharp drop in traffic in August, which dealt a blow to second-quarter results.

The wholesaler is also dealing with industry-wide supply chain complications that are “ubiquitous” according to CEO Mark Tritton.

And the company saw steeper inflation costs during the summer months, particularly towards the end of the second quarter of August, Tritton said. This has reduced sales and profits, he said.

Plagued by all of these roadblocks, Bed Bath & Beyond has slashed its sales and earnings outlook for the year, and its guidance for the third quarter looks disappointing.

Here’s how Bed Bath & Beyond performed in the second quarter ended Aug. 28 compared to Wall Street’s expectations, based on a refinitive poll of analysts:

  • Earnings per share: 4 cents adjusted vs. 52 cents expected
  • Revenue: $ 1.99 billion versus $ 2.06 billion expected

In the most recent period, Bed Bath & Beyond lost $ 73.2 million, or 72 cents per share, compared to net income of $ 217.9 million, or $ 1.75 per share, last year. Without one-off effects, the company earned 4 cents per share and thus less than the 52 cents expected by analysts.

Revenue declined 26% to $ 1.99 billion from $ 2.69 billion last year. That fell short of the estimate of $ 2.06 billion.

“Although our results for the quarter were below expectations, we remain confident about our multi-year transformation,” Tritton said in a press release.

Bed Bath & Beyond has remodeled its stores and launched its own brands that sell everything from bath towels to cooking utensils to dorm decorations. In the previous quarter, it seemed like those efforts paid off and the business gained momentum.

But this progress stalled in the summer months. Tritton stated that the environment became more difficult as Covid-19 fears re-emerged amid the spreading Delta variant. In states like Florida, Texas and California, which make up a significant portion of sales, business is being impacted by rising coronavirus cases in the region, Tritton said.

That means that not as many shoppers have shown up during the normally busy back-to-school season for retailers like Bed Bath & Beyond. It could mean trouble for rivals like Target, Walmart and Kohl, who are yet to have to report back-to-school results.

Bed Bath & Beyond expects adjusted earnings between breakeven and 5 cents per share for the third quarter on sales of $ 1.96 billion to $ 2 billion. According to Refinitiv data, analysts had expected earnings of 28 cents per share on sales of 2.02 billion US dollars.

For the year, Bed Bath & Beyond lowered its expectations and now aims to make between 70 cents and $ 1.10 per share on an adjusted basis on sales of $ 8.1 billion to $ 8.3 billion.

Previously, the company had claimed annual adjusted earnings of between $ 1.40 and $ 1.55 per share on sales of $ 8.2 to $ 8.4 billion.

Analysts forecast adjusted earnings per share of $ 1.51 on revenue of $ 8.31 billion in fiscal 2021.

The full press release from Bed Bath & Beyond can be found here.

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