Not long ago, many investors assumed that Bed Bath & Beyond was dying. But a surprise jump in like-for-like sales last quarter fueled by improving e-commerce has renewed faith on Wall Street that the home goods retailer is carving out a new place in shopper habits.
Bed Bath & Beyond reported Thursday that comparable sales, a metric that eliminates the impact of newly opened or closed stores, rose 6% in the three months ended Aug. 29. The Source: An 89% increase in web sales showing Bed Bath & Beyond is dealing well with internet shoppers during the COVID-19 crisis. Your digital business now accounts for a third of total revenue.
Analysts had expected like-for-like sales to decline slightly, and the surprise gain sent Bed Bath & Beyond shares up 30% in morning trading. The company, which made strides to shore up its finances last year and traded much of its c-suite, has now seen shares nearly five times since a March low.
The retailer’s resurgence is driven by a skillful combination of better merchandise selections, as well as the rapid and efficient implementation of services such as in-store and curbside pickup for online ordering, as well as same-day delivery. While these are now common among large retailers, Bed Bath & Beyond quickly increased them.
Bed Bath & Beyond is also benefiting from a broader spike in home goods purchases that is also increasing sales at chains like Target, Williams-Sonoma and Walmart, as well as Lowe’s and Home Depot for higher priced items. .
Bed Bath & Beyond returned to earnings for the quarter with a net income of $ 217.9 million on sales of $ 2.69 billion, compared with a loss of $ 138.8 million a year earlier on sales of $ 2.6 billion. Total sales fell slightly because the company closed some stores.
But the company helped itself by optimizing its offering, which had become unwieldy, allowing it to cut down on what it sells at clearance prices. The back-to-college season also fared well despite all the uncertainty surrounding students’ ability to return to campus: Sales of college dorm supplies were up 21% during the quarter.
Bed Bath & Beyond is also rebranding its store with Mark Tritton, the private label guru who came to the company last fall from Target.
