Bed Bath & Beyond (BBBY) shareholders lost ground to a falling market this week, with the stock dropping 27% by Thursday afternoon compared to a 2.6% slump for the S&P 500.
The decline put the specialty retailer back in negative territory for the year after having jumped nearly 200% at one point. It was sparked by disappointing earnings results.
Bed Bath & Beyond said on Thursday morning that sales at existing locations, or comps, fell 1% to significantly lag management's forecast. Executives blamed a sharp customer traffic slowdown in August, the quarter's final month. "Following solid growth in June, we saw unexpected external disruptive forces ... that impacted our outcome," CEO Mark Tritton said in a press release.
Executives went on to link resurgent COVID-19 cases with the reduced shopper traffic.
The weak sales figure combined with spiking costs to create net losses. Bed Bath & Beyond lost $73 million compared to a $218 million gain a year ago.
Tritton and his team still have faith in their multi-year rebound plan that involves slimming down the store portfolio and selling more products through online sales channels. But the short-term outlook is heading lower. Bed Bath & Beyond reduced its forecast for sales and profits to reflect customer traffic struggles and rising costs, consistent with the trends investors saw in the most recent quarter.
The good news is that the retailing chain is not facing a cash crunch and can still spend freely on its rebound initiatives. But the prospects for sustainably rising sales seem dimmer after this operating update.