Dive Brief:

• Bed Bath & Beyond on Tuesday reported third-quarter net sales fell 33% year over year to $1.3 billion, while comparable sales declined 32%. By banner, Bed Bath & Beyond comps fell 34% and BuyBuy Baby comps fell “in the low-twenties percent range,” according to a company press release.
• Operating loss swelled by more than 423% from last year to $450.9 million, while net loss grew by 42.2% to reach about $393 million.
• The company reiterated that it is currently exploring strategic alternatives for the business, which it said last week included a potential bankruptcy filing or sale.

Dive Insight:

Bed Bath & Beyond’s dismal third-quarter earnings report comes after the company issued a “going concern” warning based on recurring losses, negative cash flow from operations, and its current cash and liquidity projections.

At the start of the third quarter, the retailer introduced a turnaround plan that included closing more than 150 underperforming stores, laying off staff and discontinuing some of its private labels as it realigns its inventory in favor of national brands.

However, inventory constraints stymied progress on those plans and negatively impacted Bed Bath & Beyond’s financial performance.

“Following some of the micro- and macro-economic challenges we, and the sector, faced at the beginning of the quarter, we experienced an acceleration in vendor payment terms and credit line constraints. This led to lower receipts and therefore lower in-stock levels in the 70% range, which hampered our sales further in an already competitive environment,” CEO Sue Gove said on a call with analysts Tuesday.

While the home goods market has softened after early pandemic highs, analysts point to other areas of concern for Bed Bath & Beyond. According to GlobalData research, the retailer’s sales have declined by 54.4%, or $1.5 billion, over the past three years.

“The perpendicular nature of this drop cannot be blamed solely on market forces nor on competition, it also needs significant doses of negligence and misjudgment. Sadly, Bed Bath & Beyond had both things by the bucket-load thanks to a botched reinvention program and a complete lack of commercial understanding,” GlobalData Managing Director Neil Saunders said in emailed comments.

Bed Bath & Beyond also reported declines across its channels: In the third quarter, comps fell 31% in its stores and 33% in its digital business. According to foot traffic analytics firm Placer.ai, store visits in December 2022 were down 26.5% year over year and in November 2022, they were down 23.1% compared to the year-ago period.

As Bed Bath & Beyond eyes strategic options, bankruptcy or a sale of all or some of its assets — similar to what Pier 1 pursued — is most likely, according to Saunders.

“Whatever path Bed Bath & Beyond determines, it will not be the final resolution to this saga. It will be just the beginning of many more months or turmoil and disruption,” Saunders said.