Image source: The Motley Fool.
Bed Bath & Beyond (BBBY +0.00%) reported third-quarter results on Dec. 21. The home-goods retailer is struggling with sluggish sales and falling margins.
Bed Bath & Beyond results: The raw numbers
|
Metric |
Q3 2016 |
Q3 2015 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$2.955 billion |
$2.952 billion |
0.1% |
|
Net earnings |
$126 million |
$178 million |
(28.9%) |
|
Earnings per share |
$0.85 |
$1.09 |
(22%) |
Data source: Bed Bath & Beyond Q3 2016 earnings press release.
What happened with Bed Bath & Beyond this quarter?
Net sales inched up 0.1% year over year to $2.955 billion. On a comparable basis, sales fell 1.4%, compared with a 0.4% increase in the year-ago quarter, as the impact of "low-single-digit" declines in Bed Bath & Beyond's same-store sales more than offset a greater than 20% increase in comps from the company's digital channels.
"The lion's share of our business is done in bricks and mortar," said CEO Steven Temares during a conference call with analysts. "And the foot traffic that we're seeing, the reduction in foot traffic, I think has been seen across all retail, and as long as we have a significant component in bricks and mortar like that, that is a bit of a headwind for us."
Bed Bath & Beyond's profitability also continued its downward trend, with gross and operating margins falling to 37% and 7.1%, respectively -- down from 37.8% and 9.9% in the prior-year period. Higher coupon, shipping, labor, and technology costs all contributed to the decline.
All told, net earnings plummeted 29% to $126 million, while earnings per share, which were helped somewhat by share buybacks, dropped 22% to $1.05.
Looking forward
These results led Bed Bath & Beyond to cut its full-year sales forecast. Comparable sales are now projected to decline by approximately 50 basis points, with net sales increasing about 1%. Bed Bath & Beyond's previous guidance was for full-year comparable sales to be flat to up 1%, with net sales expected to rise about 125 to 140 basis points than the increase in comp sales.
Bed Bath & Beyond also said that it now expects its fiscal 2016 earnings per share to come in at the low end of its guidance range of $4.50 to $5.00.
"In summary, it continues to be a transitional time for retail," said Temares. "As our business transforms, we are navigating the competitive landscape and adapting as customer preferences and purchasing behavior evolve."
