Bed Bath & Beyond (BBBY 3.11%) shareholders lost ground to the market on Thursday as their stock dropped 3% by 2:45 p.m. EDT compared to a 0.4% decline in the S&P 500. The specialty retailer's shares were down by as much as 9% earlier in the day but recovered a bit by early afternoon trading and are still in positive territory so far in 2022.
The drop came in the wake of an earnings report that showed significant struggles around sales growth and profitability.
The company said early on Wednesday that revenue at existing locations dropped a brutal 12% in the three-month period ending in late February. That result stacks up poorly against national home goods peers. Target, for example, expanded comparable-store sales at a 9% pace over the holidays.
Bed Bath & Beyond struggled to secure enough of the right inventory due to supply chain bottlenecks and purchasing challenges. Management cited these issues when explaining the surprisingly weak operating results.
"We are disappointed that our sales and gross margin performance does not reflect our team's hard work and execution," CEO Mark Tritton said in a press release .
The good news is that Bed Bath & Beyond is opening a few new distribution centers, which should help ease the supply chain problems that pinched growth in the fourth quarter. Its buybuy Baby brand expanded sales at a solid clip, too.
Still, investors found more reasons to avoid the stock on Thursday. The company is projecting a difficult first half of the new year ahead before sales and profitability trends begin improving later in 2022. Bed Bath & Beyond is entering the second year of a turnaround effort that management believes will require three years to complete. This week's earnings report suggests that this recovery might take more time or may even fail to establish sustainable sales and profit growth.
That's why investors might want to pass on this retailer's stock for now even though shares have come down over the last few days.