Bed Bath & Beyond Inc. (NASDAQ:BBBY) will close permanently around 200 stores in the next two years as its quarterly sales declined by 50%. However, in April and May, the company indicated that online sales grew over 100% as customers stocked up home décor supplies.
Bed Bath to shut 200 stores
The company will begin shutting the stores towards the end of this year as it charts a path towards profitability following the impact of COVID-19 pandemic. Currently, the company operates around 1,478 stores that include 955 Bed Bath & Beyond outlets. It also runs Cost Plus Inc. and Buy Buy Baby, but the closures will mostly affect the Bed Bath & Beyond stores. The company wants to capitalize on due lease expirations with the closures as it tries to turn things around. Similarly, Bed Bath & Beyond has also reduced costs related to store maintenance.
Bed Bath indicated that the measures taken could save between $250 and $350 million in annual costs minus one-time expenses. The company’s CEO, Mark Tritton, indicated that some of the stores have been dragging Bed Bath down, and they will continue re-evaluating their stores now that they have data criteria.
Sales plunged almost 50% in Q1
The COVID-19 pandemic hit the company hard, pushing it to shut its stores temporarily on March 23. Sales plunged almost 50% to $1.31 billion in Q1 2020 from around $2.57 billion the year before. Although sales plunged, the company managed to narrow its net loss from $371.09 million or $2.91 per share to $302.29 million or $2.44 per share. The drop in sales was mainly due to the closure of stores.
However, online sales grew 82% in the quarter, over 100% increase in April and May. Online sales accounted for around two-thirds of the sales in Q1. The CEO confirmed that they reopened most of the stores, and are performing beyond expectations. Tritton indicated that during the pandemic, consumers shifted to large-ticket items like bedding and home décor.