Bed Bath & Beyond reported its first sales spike in the same store in nearly four years on Thursday, as its online business grew more than 80% in the quarter as shoppers stocked up on disposable face masks, dorm decor, and patio furniture.
Its shares rose more than 18% in premarket trading.
The company said it saw 2 million new customers during the reporting period, many of whom were younger and were spending more money per trip. The growth in sales, as well as lower spending on promotions and using the stores to fulfill more online orders, helped the company generate a profit.
"If home is everything, we are really ready to be the epicenter of it," said CEO Mark Tritton in an interview with CNBC. "We were agile when it came to coming after."
Here's how the company performed in its second fiscal quarter ending August 29, compared to analyst expectations based on refinitive data:
Earnings per share: 50 cents, adjusted versus a loss of 23 cents, expected Revenue: $ 2.69 billion versus $ 2.60 billion expected
The company announced that net income increased from a loss of $ 138.8 million, or $ 1.12 per share, to $ 217.9 million, or $ 1.75 per share, a year ago. Without one-off effects, the company earned 50 cents per share, before expectations of a loss of 23 cents.
Net sales decreased approximately 1% from $ 2.72 billion a year ago to $ 2.69 billion, but were above expectations of $ 2.60 billion.
Revenue in the same store rose 6% – the first quarter of growth in this category since the fourth quarter of fiscal 2016. According to FactSet, analysts had called for a 2.1% decline. According to Bed Bath & Beyond, online sales contributed to the growth. Comparable digital sales increased by around 89%. Sales in the branches decreased by 12% year-on-year.
Bed Bath & Beyond doesn't offer a full year outlook, but said sales in the same store were positive in September, with similar store and digital sales patterns compared to the second quarter.
Earlier this week, as part of a partnership with Shipt and Instacart, the retailer announced the nationwide introduction of same-day delivery, just in time for the busy Christmas season.
The debut comes after Bed Bath & Beyond launched an online purchase, in-store pickup, and roadside contactless pickup earlier this year during the coronavirus pandemic as shoppers searched for hand sanitizer, breadmakers, and diapers on its websites.
Under Tritton, who joined Bed Bath & Beyond from Target in November, the big box retailer added to its management team but cut jobs during the pandemic and plans to close some stores to get rid of unprofitable businesses.
Analysts have become more optimistic about Tritton's plans, which include a greater investment in private label. But the company is also reaping the benefits of having more people spicing up their homes during the pandemic.
The company, which had 1,476 stores as of Aug 29, plans to close around 200 locations, mostly Bed Bath & Beyond, over the next two years. 63 stores close in the third quarter. These 200 stores are said to have net annual sales of around $ 1 billion in fiscal 2019, but are hoping to bring at least 15% to 20% of those dollars online or into other stores.
According to Tritton, the company is seeing momentum as several other home retailers, like Pier 1 Imports, filed for bankruptcy and closed stores in 2020.
"Customers are looking for alternatives to where they used to shop," he said. "There are key categories where we see strength," he said.
Still, Bed Bath & Beyond has to compete with Amazon, Walmart and Target, who have spent years investing money in their e-commerce activities and, in the case of Walmart and Target, spiced up stores.
Bed Bath & Beyond is expected to host a virtual investor meeting on October 28th, during which more will be revealed about its turnaround plans and financial outlook.
At the close of trading on Wednesday, stocks were down roughly 14% this year, giving the company a market cap of $ 1.9 billion.
The full press release on the result can be found here.