BBBY Stock (NASDAQ:BBBY)
Bed Bath & Beyond Inc.’s (NASDAQ:BBBY) bad results for the third quarter of the fiscal year 2022 show that it is still losing money. Not only did the top and bottom lines miss the Zacks Consensus Estimate, but they also went down from the same time last year. Even though they tried to change the selection and use other selling and marketing strategies, they needed help to keep up with the demand.
The store selling home goods needs more cash because suppliers asked for strict payment terms before the busy holiday shopping season. Also, because fewer products were on the shelves, there were fewer customers.
Management said it plans to let go of more workers to save money. It had already said it would close 150 stores and lay off 20% of its corporate and supply-chain employees. Also, the company needed help to get bondholders to trade their investments for more debt.
After a string of bad sales numbers, BBBY recently said it is considering different options, including going bankrupt. But the company is doing a lot to ensure they have enough stock to meet demand. They are doing this by using the money they made from holiday sales.
Because of this, BBBY stock has dropped 59.1% in the last three months, while the industry has grown 17.9%. But after the market closed on January 10, shares of BBBY stock went up by almost 28%. This could be because there are rumors that it will go bankrupt, making it a possible takeover target. And shares continued to soar on Wednesday, with a gain of nearly 55%.
In the third quarter of its fiscal year, Bed Bath & Beyond lost $3.65 per share, compared to just 25 cents the year before. The number was also bigger than the $2.36 loss that the Zacks Consensus Estimate said would happen.
Net sales of $1,259 million were 33% lower than the same time last year, and they were less than the $1,379 million Zacks Consensus Estimate. Comparable sales (comps) dropped 32% from one year to the next. Comparable sales in stores fell 31% year over year, while comparable sales online fell 33%.
Bed Bath & Beyond’s same-store sales dropped 34% year over year, while buybuy BABY’s same-store sales dropped in the low 20s.
In the year’s third quarter, the adjusted gross profit dropped by 57.4%, to $287.4 million. Also, the adjusted gross margin decreased by 1,310 basis points (bps) to 22.8% due to the negative effects of Owned Brands clearance activity and higher promotional activity.
Due to efforts to cut costs, SG&A costs dropped 16.3% to $583.6 million in the last quarter. SG&A costs increased by 1070 basis points from the year before to 46.3%. The company is on track to reach its goal of saving $250 million on SG&A costs.
Adjusted EBITDA was $225 million in the red, compared to $40.6 million in the black the year before. The main reasons for the drop were slow sales and low margins.
Financial Position
At the end of the third quarter, Bed Bath & Beyond had $153.5 million in cash and investments. As of November 26, 2022, the company had $1,935.4 million in long-term debt and a $798.6 million shareholder deficit. As of November 26, 2022, it also had $0.5 billion in cash and short-term investments.
In the third quarter of the fiscal year, $307.6 million was spent on operating activities, and $95.6 million was spent on capital projects.
During the third quarter of the year, six stores closed. As of November 26, 2022, the company had 949 stores, including 762 named stores in all 50 states, the District of Columbia, Puerto Rico, and Canada, 137 buybuy BABY stores, and 50 stores called Harmon, Harmon Face Values, or Face Values. A joint venture between the company and another company runs 12 flagship stores in Mexico.
Featured Image: Unsplash @ freestocks
