(Bloomberg) — Bed Bath & Beyond Inc. plunged after a slowdown in store traffic and unrelenting supply chain challenges led the home-goods company to cut its forecast, an ominous sign for the retail industry ahead of the all-important holiday shopping season.
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Revenue in the quarter ended Aug. 28 fell 26% from a year earlier to $1.99 billion, short of the $2.06 billion estimate from analysts compiled by Bloomberg. Same-store sales, a closely watched retail metric, dropped 1%, while Wall Street had projected a gain of 1.8%. For the company’s self-titled stores, same-store sales declined 4%.
The stock fell as much as 29% to the lowest level in a year. The decline erased what had been a 25% gain for the shares this year through Wednesday’s close.
Bed Bath & Beyond said that store traffic slowed significantly in August amid renewed Covid concerns — especially in large states such as Texas, Florida and California, which make up about a third of volume for the retailer. “Therefore, sales did not materialize as we had anticipated,” Chief Executive Officer Mark Tritton said in a statement.
The company’s results also heighten concern about supply-chain challenges that have plagued Corporate America this year as rising costs, a lack of workers and freight difficulties run up against persistently high demand.
“Things just rapidly accelerated in terms of costs by month,” Tritton said in an interview, adding the company is having trouble getting orders completed and on shelves, with delivery delays in the range of 30 to 45 days.
“This is happening now and I think it’s going to go right through the fourth quarter, end of that first half,” he said, referring to the fiscal period that would run through next summer. “We’re building contingency plans to accommodate all those issues.”
He projected the holiday shopping season being stronger than the quarter that just passed. For now, however, store traffic remains low.
“The challenges we faced in August have not abated in September,” Tritton said during the company’s call with analysts. The company’s focus is now on reaching a recovery by November, which historically has represented nearly half of the company’s sales during the third quarter.
He said the delta variant has altered consumer behavior, with data showing that U.S. shoppers have grown more cautious about shopping in stores. Gains are also moderating in the market for home-goods, which was turbocharged by pandemic restrictions that caused consumers to funnel cash toward sprucing up their living spaces.
“It’s just confusing times for people,” Tritton said.
Bed Bath & Beyond now expects sales for fiscal 2021 to be in a range of $8.1 billion to $8.3 billion — a reduction from the outlook it published in late June, when it projected revenue as high as $8.4 billion.
Tritton added that the company’s turnaround plans remain on track. The retailer has revamped its operations since he was hired from Target Corp. in late 2019 — it now offers more of its own brands and has opened new distribution centers.
(Updates with shares starting in first paragraph.)
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