Stock at Bed Bath and Beyond plunged by over 12% in afterhours trading on Tuesday following the release of its quarterly earnings that showed sales at same stores came up short of expectations on Wall Street.
The retailer posted a sales drop in same store sales of 2.6%, while analysts were expecting a drop of just 0.7%. While the comparable sales for the businesses’ digital channels expanded by over 20%, sales in-stores dropped in the mid-single digits.
The company announced that sales reached $2.9 billion, which were down 1.7% from the same period one year ago. The retailer said costs for restructuring, Hurricane Harvey and a change in an accounting standard weighed on results for the second quarter.
CEO Steven Temares on Tuesday said that how customers find products, knowledge of prices, their expectations and what is expected of services are changing very rapidly.
Temares during his phone conversation with analysts’ outlined initiatives being pursued by Bed Bath and Beyond to accomplish meeting the needs and wants of customers.
The initiatives mentioned included using a new technology model, the hiring of a new CIO and the first CTO for the company, and the establishing of an office for strategic portfolio management.
The CEO said that Bed Bath and Beyond launched four new projects that are focused on meeting the rapidly changing needs of customers, improving their margins, improving the supply chain of the retailer and optimizing its inventory.
The initiative that is customer-focused is the most advanced of the four, said Temares. Realigning the management structure of the store including the decision last month to cut 880 assistant and department store manager positions, is under that same umbrella, the CEO added.
Bed Bath and Beyond is expecting these initiatives to save the company over $150 million during the next few years, of which a portion might be reinvested.
Online sales account for just 15% of the total sales at Bed Bath and Beyond, said Temares, and that means there is room for substantial growth, he added.
Bed Bath and Beyond will open a new fulfillment center that is 525,000 square foot in Las Vegas during the fall. It will also expand its same-day pilot delivery service in Dallas, Houston, and Washington D.C., to include two New York City boroughs and Seattle.