Bed Bath & Beyond reports first comps growth since 2016

Dive Brief:

While Bed Bath & Beyond reported second quarter net sales fell 1% from last year to $2.7 billion, its comps rose 6%, marking the first sales growth in that measure since the fourth quarter of fiscal 2016.
The same-store sales gain benefited largely from an 89% growth year over year in its digital channels during the quarter, according to a Thursday press release.
The home goods retailer also reported its operating profit improved nearly 250% to $270.5 million from a loss of $182.3 million in the year-ago period. Net profit increased 257% to $217.9 million from a loss of $138.8 million last year.

Dive Insight:

Bed Bath & Beyond has been one of the beneficiaries of a pandemic that has rattled much of the industry.

While many other retailers selling discretionary goods posted steep losses in recent months, the unique reality of the crisis has given a boost to home goods retailers.

Consumers began to invest more into their homes — the place many were, and still are, spending the majority of their time — and less into other categories like travel, entertainment and restaurants, Wedbush analyst Seth Basham recently told Retail Dive.

And while Bed Bath & Beyond wasn't spared from temporarily closing its stores in the spring, resulting in hits to both its top-line sales and gross margin in the first quarter, its quick response to fulfillment set it up for success in the second quarter.

The retailer this year introduced buy online, pick up in-store and contactless curbside services, and as of May, said the service would be expanded to 90% of its fleet. And earlier this week, the company launched same-day delivery at its Bed Bath & Beyond and BuyBuyBaby stores through partnerships with Shipt and Instacart.

"We are delighted by the continued strong response to our BOPIS and contactless Curbside Pickup service offerings, and we believe the recent launch of our new Same Day Delivery service will make it even easier to shop with us, as we help families across North America unlock the magic of holidays at home," CEO Mark Tritton said in a statement.

Bed Bath & Beyond, which typically receives a boost from back-to-college consumers, had to adapt to an unprecedented school year. In August, the retailer launched College from Home, a shopping experience to help consumers transform childhood bedrooms into virtual learning spaces.

"Despite the unprecedented COVID impact on our business over the past six months, Bed Bath & Beyond remained a key college destination this year," Cindy Davis, chief brand officer, said on a call with analysts Thursday. She also highlighted the fact that the typical buying season for college supplies may be extended this year given the circumstances, citing Bed Bath & Beyond's own data that shows 32% of students will be heading back to campus for the first time in 2021. "They have shopping to do. We will be ready to meet their needs, with inspiration, value and ease," Davis added.

But at the same time, the home goods retailer has been working to trim the size of its business, both in terms of store footprint and employee headcount. Bed Bath & Beyond earlier this year announced it would close hundreds of stores, with about a third of those being completed by the end of this year, COO John Hartmann said on the call. The company in August also announced about 2,800 layoffs — or 5% of its workforce — spanning across its headquarters and retail stores. Those layoffs came on top of a February announcement of 500 corporate employee layoffs, and another one in June affecting hundreds of employees in New Jersey and Florida.

Bed Bath & Beyond has also sold off some of its non-core assets, including One Kings Lane and PersonalizationMall.com, but Tritton reiterated on Thursday the company continues to review other assets of its business, which should be welcomed by investors who have been pushing the retailer to go further and unload Cost Plus World Market and Christmas Tree Shops.