Customers abandoned Bed Bath & Beyond last month. Stock tumbles 30%
By Jordan Valinsky, CNN Business
Shares of Bed Bath & Beyond plunged nearly 30% in early trading Thursday after the retailer revealed that foot traffic “slowed significantly” in August, pummeling its second-quarter earnings.
CEO Mark Tritton said in a release that the chain’s sales were solid in June, but then nosedived in the following two months because of “unexpected, external disruptive forces,” namely, the growing spread of Covid-19 and ongoing supply chain challenges.
Tritton said that the Delta variant hurt sales in several large states, including Texas, Florida and California — virus hotspots that account for a “substantial portion” of the company’s total revenue.
On top of that, the supply chain problems that have ravaged multiple industries over the past year and a half intensified in August. Tritton described the disruption as “unprecedented” and said that increasing inflation “impacted sales and gross margin.” That led to much higher supply prices than Bed Bath & Beyond had anticipated, swinging the company to a $73 million loss across all its brands. Sales at the flagship stores fell 4%.
However, Tritton remains “confident” in the company’s multi-year transformation that includes creating new, private labels and remodeling stores. Bed Bath & Beyond’s new flagship location in New York City, which opened in July, is exceeding expectations, Tritton said.
Bed Bath & Beyond is in the midst of remodeling 450 stores, representing about half of its locations, at a cost of $250 million. The company has been hit with falling sales and declining foot traffic in recent years as shoppers defect to competitors such as Target and Amazon, which carry much of the same household basics that Bed Bath & Beyond sells. The company is also closing 200 underperforming stores.
Tritton joined Bed Bath & Beyond from Target two years ago and has led the company through a turnaround over the past year as housebound shoppers increased their spending on kitchen and home essentials.
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