Bed Bath & Beyond to close 200 stores as sales plunge 49% due to pandemic

The ravaging impact of the coronavirus pandemic resulted in the lockdown of most companies and industries. This has inadvertently affected the economies of these industries such that some of the companies are grappling with great losses and making moves to close down some of their branches. Among the companies that are worst hit by the pandemic is Bed Bath & Beyond (BBBY).

On Wednesday, July 8, Bed Bath & Beyond revealed that it would be closing some of its stores for a period of two years in order to contain the impact of the pandemic on the company's economy. The company revealed that its net worth has narrowed to $302.29 million, or $2.44 per share, from $371.09 million, or $2.91 a share, a year ago.  The company also revealed that its sales fell 49% to $1.31 from $2.57 million last year, even with the surge in online sales in the month of May and April. With an exception to one-time items, the company’s share loss is $1.96 per share. Its shares were falling almost 7% in after-hours trading.

As a result of this loss, the company has decided to permanently close 200 stores for the next two years. The plan to close the store would be starting later this year.  According to the company, this action should generate annual cost savings between $250 million and $350 million, excluding related one-time costs.

As of May 30, the company operated a total of 1,478 stores including 955 Bed Bath & Beyond.  

Here is a breakdown of the company’s performance during its fiscal first quarter ended May 30

Revenue: $1.31 billion

Adjusted loss per share: $1.96  

When the company temporarily forced shut many of its stores as a measure against the spread of the coronavirus, sales fell 49% to $1.31 billion from $2.57 billion. In a report by Refinitiv, it was revealed that analysts were beckoning on the company to record an adjusted share loss of $1.22 per share on revenue of $1.39 billion.

With the surge in online sales in May and April, the company recorded 82% online sales in the month of May and above 100% in the month of April. However, even with this surge, the company’s gross margin dropped almost 8% points. This is partly because most of the company’s sales are online, and online sales come with a higher shipping and delivery fulfillment than physical sales. Also, digital sales only represent two-thirds of the company’s first-quarter sales. 

Triton revealed that as Bed Bath is reopening, many are performing ahead of the retailer’s internal expectations.  During the pandemic, consumers have shifted their buying interest from cleaning supplies, coffee, and water filters to bigger items like home décor, bedding, and accessories. This shift in interest is expected to have a positive impact on the profit of the company. 

Furthermore, the company has refused to provide any outlook for the year because the pandemic is still volatile. As it is, some retailers like Macy’s and Levi’s are currently planning on locking their stores the second time. This is because of the increasing rate of infected persons in Texas and Florida. In fact, most state governments are already tightening their restrictions on the companies that can operate in the state and the ones that cannot. As it is, Apple has close up more than 10 stores on its own. 

Despite the negative turn out, Bed Bath is optimistic that the company can withstand the present crisis. In their statement on Wednesday, the company believes it has a “strong financial position” to manage through the crisis. 

Bed Bath ends the first quarter with roughly $1.2 billion in both investment and cash. With almost 50% loss, it currently has a market cap of $1.3 billion.