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By Shubhangi Mathur, 5:00 PM ET
Key Points:
· Bed Bath & Beyond loses more than a fifth of its market value
· The retailer’s net sales fell 26.2% in the fiscal second quarter.
· Supply-chain challenges and inflation lead to decline in sales.
Bed Bath & Beyond Inc shares tanked 22% on Thursday, erasing more than a fifth of its market value after it reported a sharp decline in quarterly sales.
The retailer is facing several challenges including supply chain constraints, inflation and lesser footprints due to COVID-19 spike.
Net sales for the fiscal second quarter fell 26.2% to $1.98 billion as traffic slowed in August, the company said.
Chief Executive Mark Tritton said that key states including Florida, Texas and California faced challenges in the company’s operating environment, which contribute to a large portion of sales.
Cost inflation also soared more than the company expected, especially later in the quarter, he said.
“The speed of industry inflation and lead-time pressures outpaced our plans to offset these headwinds and, as a result, we did not pivot fast enough, especially on price and margin recovery,” he said.
Bed Bath & Beyond posted a net loss of $73.2 million in the quarter, compared to a profit of $217.9 million last year. Adjusted earnings for the quarter were 4 cents a share.
The company has reduced its sales and adjusted profit expectations for the year due to the supply-chain constraints.
Bed Bath & Beyond expects sales to be between $8.1 billion and $8.3 billion for the fiscal 2021, compared to earlier forecast of $8.2 billion to $8.4 billion.
The adjusted earnings are now expected to be 70 cents a share to $1.10 per share, compared to $1.40 per share to $1.55 per share.
Supply-chain challenges have affected almost everything in the market. Dollar Tree Inc announced this week to start selling products at prices slightly higher than $1 at some stores.
(With inputs from WSJ)