(Bloomberg) — Bed Bath & Beyond Inc. tumbled as much as 21% in premarket trading after reporting second-quarter sales that missed expectations and reducing its full-year outlook, with the delta Covid-19 variant eroding the home-goods retailer’s store traffic.
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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. The closely watched retail metric of same-store sales fell 1%, while Wall Street had projected a gain of 1.8%. For the company’s self-titled stores, same-store sales fell 4%.
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. Those states 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.
In an interview, he added that the delta variant has altered consumer behavior, and data show that U.S. shoppers have grown more cautious about shopping in stores.
“It’s just confusing times for people,” Tritton said.
The company’s shares fell as low as $17.57 in premarket trading Thursday, putting them on pace for their lowest level in about a year.
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 also cited supply-chain challenges as “things just rapidly accelerated in terms of costs by month.” He said 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.”
Corporate America is increasingly plagued by rising costs related to a lack of workers, shipping and freight difficulties and persistently high demand. Investors will be listening for more details during executives’ call with analysts on Thursday. Tritton sees the holiday shopping season being stronger than the quarter just passed.
He 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. Investors have responded favorably, with shares gaining 25% this year through Wednesday’s close.
(Updates with shares starting in first paragraph.)
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