Bed Bath & Beyond touts turnaround as losses widen

Bed Bath & Beyond touted "sequential progress in several key areas" of its turnaround plan on Thursday despite reporting a widened loss in its second quarter.

"In the first quarter, we experienced a significant dislocation between sales and inventory that we began to address immediately during the second quarter," Interim CEO Sue Gove said in a statement. "Aggressive inventory optimization actions, including accelerated markdowns and strategic promotions, led to double-digit improvement in this gap. Although very early, we are also seeing signs of progress as merchandising and inventory adjustments begin."

The home goods retailer reported a net loss of $366 million, or $4.59 per share, from $73 million, or 72 cents per share, a year earlier. Net sales fell to $1.437 million, down 28% compared to $1.984 million a year ago, and comparable sales declined 26%. 

Ticker	Security	Last	Change	Change %
BBBY	NO DATA AVAILABLE	-	-	-

Shares fell and are down approximately 57% year to date.

In August, the home goods retailer announced plans to cut 20% of its workforce across corporate and supply chain and close 150 underperforming stores. It also said it would discontinue its Haven, Wild Sage and Studio 3B labels, and significantly reduce the inventory of its remaining Owned Brands.

To drive sales, Gove said that the company would leverage its Welcome Rewards loyalty program and bring back national brands including Calphalon, Ugg, Cuisinart, Dyson and Oxo.

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Gove told investors that the company has been focused on working with its suppliers and that its debts and liabilities are "considerably healthier than in the prior quarter." 

During the quarter, Bed Bath & Beyond secured more than $500 million in new financing, including an expanded $1.13 billion asset-backed revolving credit facility and a $375 million "first-in-last-out" facility. It also previously disclosed plans to launch an at-the-market offering of up to 12 million shares. Roughly 3 million shares have been sold so far for proceeds of approximately $30 million.

"We are confident that our current liquidity will enable the very strategic plans we have implemented to drive further improvement and increase organic cash generation over the coming quarters," Gove added.

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Looking ahead, Bed Bath & Beyond plans to relaunch its Baby Registry business, unveil an upgraded mobile app and release new Owned Brands in adjacent, white space categories in the second half of 2022.

It is also on track to open a total of 14 buybuy BABY stores and close a minimum of 100 Bed Bath & Beyond stores by the end of fiscal year 2022. The company has already released a preliminary list of 56 Bed Bath & Beyond stores that will close.

Bed Bath & Beyond is maintaining its full year outlook of a comparable sales decline in the 20% range, capital expenditures of approximately $250 million and adjusted selling, general and administrative expenses of approximately $250 million below last year. 

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"Based on these guidance parameters, as well as ongoing working capital management and the timing of SG&A savings, planned reductions in capital expenditures and future store closures, the Company anticipates breakeven operating cash flow by the end of fiscal 2022," the company added.

Earlier this month, the company's former CFO Gustavo Arnal fell from the iconic Jenga Tower skyscraper in downtown Manhattan. A spokesperson for the New York City Medical Examiner’s Office confirmed to FOX Business that Arnal died by suicide and suffered multiple blunt trauma injuries.