Bed Bath & Beyond Inc.(NASDAQ: BBBY) stock lost over 13.2% on September 19th after-hours session due to lower than expected second quarter results. The stock declined over 33.5% in this year to date (as of September 19th, 2017; Source: Google finance).
The group’s Net sales fell over 1.7% yoy to over $2.9 billion during the second quarter of 2017 with Comparable sales falling over 2.6%. Comparable sales from stores lost in the mid-single-digit percentage range during the second quarter of the fiscal year of 2017. On the other hand, comparable sales from customer-facing digital channels continued to gain strength in excess of 20% for the 13th consecutive quarter. The group’s net earnings reached $0.67 per diluted share hurt by unfavorable impacts of over $.08 per diluted share of cash restructuring charges related to the acceleration of the realignment of their store management structure. Hurricane Harvey impact is over $.02 per diluted share. Gross margin fell to 36.4% during the quarter from over 37.4% of net sales in the prior corresponding period. Rising net direct to customer shipping expense, coupled with fall in merchandise margin hurt the performance. Rising coupon expense led to an increase in redemptions, which partially offset a fall in the average coupon amount.
On the other side, with SPMO, the group built an integrated portfolio of strategic initiatives, which would offer a better focus on customer service transformation or CST, gross margin enhancement, inventory optimization and supply chain. The group intends to enhance their margins by improving efficiency across the entire lifecycle of their product from source to customer. The group is focusing on inventory optimization and accordingly identifying and assessing opportunities across SKU rationalization, store space optimization, assisted store ordering, product allocation while making e-commerce inventory planning, warehouse, and fulfillment processes.
The group acquired Decorist to leverage the rising online design and networking platform to offer affordable and personalized home design services to their Bed Bath & Beyond and buybuy BABY customers as well as for One Kings Lane customers. The group’s digital sales of furniture and décor in Bed Bath & Beyond and buybuy BABY account over 13% of the group’s sales. They are aiming to more than quadruple their online business over the next few years.