(Bloomberg) – Bed Bath & Beyond Inc. slumped after retail traffic slowed and relentless supply chain challenges caused the homeware company to lower its forecast, a ominous sign for retailers ahead of the all-important Christmas shopping season.
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Revenue for the quarter ended Aug. 28 was down 26% year over year to $ 1.99 billion, down from Bloomberg’s estimate of $ 2.06 billion. Sales in the same store, a closely watched retail metric, fell 1% while Wall Street was forecasting 1.8% growth. For the company’s self-titled stores, sales in the same store decreased 4%.
The stock fell as much as 29% to its lowest level in a year. The decline wiped out the 25 percent gain in stocks that year by Wednesday’s close of trading.
Bed Bath & Beyond said retail traffic slowed significantly in August amid renewed Covid concerns – especially in large states like Texas, Florida and California, which account for about a third of the retailer’s volume. “That’s why sales didn’t come about as we expected,” said CEO Mark Tritton.
The company’s results also heighten concerns about the supply chain challenges that plagued Corporate America this year as rising costs, labor shortages and freight issues meet sustained high demand.
“Things have been accelerating rapidly from month to month,” Tritton said in an interview, adding the company was having trouble completing orders and getting them to shelves, with delivery delays ranging from 30 to 45 days.
“This is happening now and I think it will be until the end of the fourth quarter, the end of this first half,” he said, referring to the financial period that would run until next summer. “We create contingency plans to address all of these issues.”
He predicted that the Christmas shopping season will be stronger than the quarter just ended. For the time being, however, retail traffic will remain low.
“The challenges we faced in August have not subsided in September,” said Tritton during the company’s analyst meeting. The company’s focus is now on achieving a recovery by November that historically represented nearly half of the company’s third-quarter revenue.
He said the Delta variant has changed consumer behavior, with data showing US shoppers have become more cautious about shopping in stores. Profits are also weakening in the housewares market, which has been charged by pandemic restrictions that have pushed consumers to invest cash in upgrading their homes.
“These are just confusing times for people,” said Tritton.
Bed Bath & Beyond now expects sales between $ 8.1 billion and $ 8.3 billion in fiscal 2021 – a reduction from the outlook published at the end of June, which forecast sales of $ 8.4 billion.
Tritton added that the company’s turnaround plans remain on track. The retailer has been operating since it retired Target Corp. Redesigned at the end of 2019 – it now offers more own brands and has opened new distribution centers.
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