Just five weeks after receiving a figurative lifeline of financial and emotional support from billionaire activist investor Ryan Cohen, home furnishings retailer Bed Bath & Beyond has showered investors with disappointment and reversed recent gains.

This, after the company’s earnings for the three months ended Feb. 26 included an unexpected loss, a 12% drop in same-store sales and an 18% decline in its fledgling online business.

“Macroeconomic factors, such as global supply chain disruption, the Omicron variant, as well as geopolitical turmoil weighing on consumer confidence, have exposed more vulnerabilities than we could have anticipated at this point in time. our transformation,” Bed Bath & Beyond CEO Mark Tritton said in a statement, which called the retailer’s second-quarter performance disappointing.

Unsurprisingly, the results and comments from the conference call did not sit well with investors who benefited from recent gains fueled by Cohen’s participation, as well as plans to, as Tritton put it, “completely rebuild the foundations of our business.

Isolated or systemic?

The troubling results of a major national retail brand at the start of the earnings season only added to existing concerns and also fueled questions about whether Bed Bath & Beyond’s problems were unique to it or indicative of a larger systemic problem that has plagued the entire sector.

While Tritton blamed a “lack of available-to-sell inventory” at all 1,100 stores and the retailer’s website as part of the problem, he pointed out that the trend would correct over the coming quarters as expected improvements supply chain would come into effect in the second half of the year. .

“Our buybuy BABY and Harmon banners demonstrate our ability to achieve stabilization and growth when there is strength in the face of macroeconomic factors given its domestic supply chain, as well as demand for different key products such than apparel and equipment versus our Bed Bath banner,” the company said.

The retailer also pointed out that sales in five key categories (bedding, bath, kitchen food preparation, home decor and home organisation), which account for two-thirds of its revenue, have been affected by the security issues. ‘inventory. It’s a scenario that suggests a strong rebound is possible once the product becomes available again, but also assumes that customers will return and not have found other places to shop.

A sticky question

Admittedly, Bed Bath & Beyond has been on a volatile path, with its stock having fallen 70% from a short-term high in January 2021, in the most recent bull run in the past six months that precipitated investment. Cohen. Even so, the franchise’s market value has fallen below $2 billion with a teenage stock price, down from a high of $77 set in 2013.

Asked by analysts on the conference call about the “lack of grip” and what is being done to counter declining customer numbers, Tritton said the face of the pandemic-era customer was different and the retailer was starting to see a stabilization of that base.

“I think during the COVID moment, we definitely saw in 20 and 21 a one-time customer doing digital research, and that affected our number of short-term customers,” Tritton said. “So we’re recovering from that, and we plan to fortify the 35 million (base) and make it stickier and create more new customers over multiple generations,” he added.

According to CFO Gustavo Arnal, Bed Bath & Beyond’s revamped loyalty program is also helping to attract and retain buyers.

“A greater proportion of our customers are now making ubiquitous purchases, both online and in-store, and the frequency of purchases is much higher than when they were just an in-store customer, and with a ticket. and a larger basket,” Arnal said on the company’s website. webcast.

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