• Jennifer Marks

BBB: “We are hell-bent on moving aggressively”

Q2 earnings, profits miss the mark

Union, N.J. – Here are six quick takeaways from Bed Bath & Beyond’s second-quarter analyst call yesterday evening.

  • And That ready to ramp up? Now positioned as BBB’s answer to off-pricers, the format features a beefed-up mix of trend-right merchandise, a treasure hunt experience and locally sourced product. There are three units fitted to the new approach – Kennesaw, Ga.; Jacksonville, Fla.; and Woodland Park, NJ. Two more are opening soon in Fairfax, Va; and Rehoboth Beach, Del. “We’re excited by the evolved model and believe it is poised for strong growth in the coming years,” said ceo Steve Temares.
  • Personalized product offerings expanding. The company will show off its capabilities with a test of small vignettes in roughly 24 BBB stores and a graphic presentation in 70 others. The BBB site now offers 7,400 personalizable skus through its PersonalizationMall.com division and third parties. It will add another 5,000 in the coming months.
  • Inventory is under scrutiny. As it looks to offer more differentiated and curated assortments across its nameplates, BBB is examining sku rationalization and re-allocating both store space and products to cut costs and enhance ROI.
  • Sales from all customer-facing digital channels – excluding sales derived by online orders placed in-store – represent roughly 15% of net sales, or approximately $425 million during the second quarter.
  • The company is in hot pursuit after the furniture and home décor business, which currently amounts to under $1 billion across all its nameplates.
  • BBB will release its fourth “full home” catalog of the year next month. In addition, its One Kings Lane division will premiere a new lifestyle catalog later this month.

Temares told analysts BBB recognizes the investments it’s making to retool for the omni-channel age are hurting profits. However, he added: “We are hell-bent on moving aggressively to drive change to satisfy our customers and produce better financial results.”

For the quarter ended Aug. 26, sales declined 1.7% to $2.9 billion, with comps down 2.6%.

Comparable sales from consumer-facing digital channels grew in excess of 20% for the 13 th consecutive quarters. Comp from stores fell in the mid-single-digit percent range.

Net earnings tumbled 43.5% to $94.2 million, or 67 cents per share. Profit was impacted by cash restructuring charges related to eliminating 880 store department and manager positions last month, costs associated with the impact of Hurricane Harvey and a new share-based payment standard.

For the first half of the fiscal year, sales slipped 0.8% to $5.68 billion. Net earnings dropped 41.5% to $169.5 million, or $1.20 per share.

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