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Bed Bath & Beyond said it plans to close about 200 Bed Bath & Beyond stores over the next two years to help save about $250 million to $350 million a year. BBBY stock price is down in the pre-market.
The American chain of domestic merchandise retail stores Bed Bath & Beyond Inc (NASDAQ: BBY) announced falling of its sales for around 50% in its latest quarter, even though online sales rose more than 100% during April and May, with buyers piling up on cleaning supplies and home decor. Bed Bath & Beyond stated it intends to shut down around 200 of its namesake stores for good during the next couple of years, starting later in 2020, as it will try to get back its profitability that suffered a significant fall due to COVID-19 outbreak. As of May 30, the company had a total of 1,478 stores, including 955 Bed Bath & Beyond shops.
At the time of writing the company’s stocks were falling 9.80% in pre-market trading and were trading around $9.50. However, yesterday BBBY stock closed with a 1.66% rise.
Bed Bath & Beyond Is Trying to Keep the Rest of Stores
Bed Bath, which also has the chains Buybuy Baby, Christmas Tree Shops and Harmon Face Values in its portfolio, noted it hopes these steps should bring about yearly cost savings of between $250 million and $350 million if we rule out related one-time costs.
Chief Executive Mark Tritton stated:
“We saw there were a number of stores dragging us down. We will continue to look at the rest of our concept doors, now that we have established the data criteria.”
So, if we look at the results the company had during its fiscal first quarter ended May 30, we can see it had adjusted loss per share of $1.96. Its revenue amounted to $1.31 billion while the company’s net loss narrowed to $302.29 million, or $2.44 per share, from $371.09 million, or $2.91 a share, a year ago.
Excluding one-time items, the company had a loss of $1.96 per share.
Sales went down by 49% to $1.31 billion from $2.57 billion a year ago, as the retailer’s stores had to temporarily halt its businesses shut for the most of the quarter in order to try to help curb the spread of coronavirus.
As per the Refinitiv estimates, analysts called for Bed Bath to report an adjusted loss of $1.22 per share on revenue of $1.39 billion.
Online sales, however, rocketed by 82% in the same period, with the development of more than 100% during April and May, the company stated. Digital sales represented around two-thirds of its first-quarter sales.
Gross margins fell approximately 8 percentage points, partially because of the larger online sales that come with increased achievement and shipping costs.
Home Is Now Everything
According to Tritton, as Bed Bath’s stores are reopening, many are operating better than the company internally expected. During the outbreak, users have transferred from piling up on cleaning supplies, water filters and coffee, to different things like home decor, bedding and accessories for the backyard. He stated that this kind of trend also could help profit margins in the future.
“Home is now everything. It’s the epicenter.”
Bed Bath also noted it will not give a 2020 outlook at this time, as the pandemic still “remains volatile.”
Some retailers as are Levi’s and Macy’s could currently face closing their stores for a second time as well, as coronavirus cases are rising again in states including Florida and Texas. Some local governments are tightening restrictions and rules on which businesses may operate to try to control the outbreak. In the meantime, some companies as Apple had already reclosed dozens of stores on its own.
Bed Bath stated that it believes it has a “strong financial position” to successfully go through the crisis. It ended the first quarter with around $1.2 billion in cash and investments.