New CEO Mark Trittoncautioned that Bed Bath & Beyond is experiencing “short-term pain” as it revealed sales decline over the holidays.
The home goods retailer reported a 5.4% decline in comparable sales over December 2019 and January 2020, driven primarily by declines in store traffic and inventory management issues, as well as increased promotional activity and markdowns. Product availability leading into the holiday period was also a contributing factor, as inventory within certain key categories was too low or out-of-stock during the period. The retailer said it’s immediately reforming its internal planning and inventory management procedures to "master the fundamentals."
While comparable sales from stores declined nearly 11%, sales from digital channels grew approximately 20% in the period. The retailer also noted its gross margins dropped about 300 basis points because of increased discounts and greater online sales.
"We are experiencing short-term pain in our efforts to stabilize the business, including the pressures of store traffic trends coupled with our own executional challenges,” said Tritton, who joined the retailer last November from Target. Commenting on Bed Bath & Beyond’s digital sales increase, he noted “I believe we can solidify this growth, while also addressing the broader stabilization of our business."
"We are beginning to make bold and broad-based changes to modernize our business and better serve our customers,” he added. “Our ability to achieve this and change the trajectory of our current results will take time, as we remaster the fundamentals of merchandising, pricing and promotion, and focus on our digital channels as part of our go-forward strategy."
Bed Bath & Beyond shares were marked 25% lower in early trading Wednesday to change hands at $11.09 each, a move that would still leave the stock with a six month gain of around 31.2%, reports TheStreet.
"As we take steps to position Bed Bath & Beyond to deliver long-term sustainable growth, we are fast tracking our efforts to rebalance our portfolio, reset our cost structure, and enhance our leadership and talent,” said Tritton.
In December, the retailer announced five senior members were leaving their positions: the chief merchandising officer, chief marketing officer, chief digital officer, chief legal officer & general counsel, and chief administrative officer. The company's chief brand officer, resigned as well.
In October, it raised its store closure plans to 60 stores by the end of fiscal 2019, up from 40 locations. The chain’s namesake Bed, Bath & Beyond division will account for about 40 of the closings, with the remaining 20 coming from its other banners, which include Christmas Tree Shops, World Market, and buybuy Baby.
Bed Bath & Beyond will report its full fiscal 2019 fourth quarter and full-year results on April 15, 2020.