Bed Bath & Beyond Inc.(NASDAQ:BBBY) stock lost over 4% on December 20th, 2017 after-hours session as the group’s third quarter of 2017 performance was not as expected. The stock corrected over 39.5% in this year to date (as of December 20th, 2017; Source: Google finance)
Bed Bath & Beyond Inc.(NASDAQ: BBBY) reported a net sales were $3 billion which is flat against prior corresponding period. Fall of 0.3% in comp sales offset better non-comp sales performance from One Kings Lane, PMall and new stores. On the other hand, the comp sales from their customer-facing digital channels continued to have strong growth in the quarter, even though comp sales from stores fell in the low single-digit percentage range.
Given the weak performance, the group’s Gross margin fell to 35.2% from over 37% of net sales in the third quarter in last year. Fall in merchandise margins, rise in coupon expense led to surge in redemptions and the average coupon amount as well as an increase in net direct to customer shipping expense. Bed Bath & Beyond net earnings fell to $.44 per diluted share ($61.3 million) from $.85 per diluted share ($126.4 million) in pcp.
Starting in March 2018, new Bed Bath & Beyond stores would be different to the customers. The current space of core Bed Bath & Beyond merchandise would be reduced. The group continues to enhance the store experience as well as setting up new infrastructure within their stores. Their associates would have devices that enable a better customer’s service.
The group continue to project that there SPMO initiatives and other ongoing internally facing initiatives would deliver a produce savings in excess of $150 million over the next few years. They plan to strategically reinvest a portion of these savings to drive future growth. The group opened 20 new stores till-date and targeting two or more openings before year-end. On the other side, they are planning to close over 15 stores all of which would lead to a net reduction of 5 Bed Bath & Beyond stores.