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(Bloomberg) – Bed Bath & Beyond Inc. has plunged after slowing in-store traffic and relentless supply chain challenges led the housewares company to cut its forecast, a worrying sign for the retail sector ahead of the all-important holiday shopping season.
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Revenue for the quarter ended Aug. 28 fell 26% from a year earlier to $ 1.99 billion, below analysts’ estimate of $ 2.06 billion compiled by Bloomberg. Same-store sales, a closely watched retail metric, fell 1%, while Wall Street had forecast a gain of 1.8%. For the company’s eponymous stores, same-store sales were down 4%.
The stock fell 29% to its lowest level in a year. The decline erased what had been a 25% gain for stocks this year through Wednesday’s close.
Bed Bath & Beyond said store traffic slowed significantly in August amid renewed concerns about Covid – especially in large states such as Texas, Florida and California, which account for about a third of the volume of the world. retailer. “As a result, sales did not materialize as we expected,” Managing Director Mark Tritton said in a statement.
The company’s results also raise concerns about the supply chain challenges that have plagued US businesses this year as rising costs, shortage of workers and transportation challenges collide with continued high demand. .
“Things quickly picked up in terms of cost per month,” Tritton said in an interview, adding that the company was struggling to complete orders and put them on the shelf, with delivery delays in the order of. 30 to 45 days.
“It’s happening now and I think it’s going to continue throughout the fourth quarter, at the end of this first half,” he said, referring to the fiscal year that would run until the next summer. “We are developing contingency plans to address all of these issues.
He predicted that the holiday shopping season would be stronger than the past quarter. For now, however, in-store traffic remains low.
“The challenges we faced in August did not abate in September,” Tritton said during the company’s call with analysts. The company’s goal is now to achieve a recovery by November, which historically accounted for nearly half of the company’s sales in the third quarter.
He said the delta variant has altered consumer behavior, with data showing U.S. shoppers have become more cautious when shopping in stores. Gains are also moderating in the housewares market, which has been supercharged by pandemic restrictions that have caused consumers to funnel money to beautify their living spaces.
“It’s just a confusing time for people,” Tritton said.
Bed Bath & Beyond now expects sales for fiscal 2021 to be between $ 8.1 billion and $ 8.3 billion, down from the outlook released at the end of June, when it forecasted revenue of up to $ 10 billion. reach $ 8.4 billion.
Tritton added that the company’s turnaround plans remain on track. The retailer has reorganized its operations since hiring Target Corp. at the end of 2019 – it now offers more of its own brands and has opened new distribution centers.
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