Bed Bath & Beyond accused of turning off air conditioning in stores to save money as sales plummet


Written by admin



A new report from Bank of America claims the company has cut air conditioning to quickly cut costs and offset declining sales.

Bed Bath & Beyond told CNN that any changes to the store’s temperature rules did not come from the corporation. “We were contacted about this report and, to be clear, none of the Bed Bath & Beyond stores were instructed to set up air conditioners, and there were no changes to corporate policy regarding the use of utilities,” a spokesperson said.

However, Bank of America analysts who have visited the stores are reporting growing concerns, including massive reductions in working hours, cuts to utilities, reduced store hours and cancellation of renovation projects. Reward programs have also been cut and replaced. Analysts expect Bed Bath & Beyond management to announce new store closures soon and suspend the opening of its Buy Buy Baby stores.

Meanwhile, sales and price cuts are rampant. The company continues to offer increased promotions, including up to 50% off linens and furniture, free same-day shipping, $10 off $30 purchases, and 20% off purchases for college students and their parents.

But analysts at Riley Securities don’t think sales promotions are helping much. They significantly lowered their price target for the retailer’s stock from $17 to $7, citing declining store traffic. The easing of Covid restrictions means less demand for home goods, they said, and supply chain problems have led to a lack of inventory to attract customers. Analysts say competitors including Walmart and Target are holding steady traffic, while Bed Bath & Beyond is down 20% to 30% year-on-year.

The changes come ahead of the home goods retailer’s Q1 report, due this week, and follow last quarter’s devastating report when sales fell 22%. Bed Bath & Beyond CEO Mark Tritton said some product unavailability caused by kinks in the supply chain resulted in about $175 million in lost sales over the period.

Analysts at Bank of America expect sales to fall another 20% this quarter.

“The company is lagging behind the industry and we believe the consensus forecast [of an 18% drop in sales] may be optimistic,” they wrote.

The Zacks Equity Research consensus estimate for the retailer’s earnings is now pegged at a loss of $1.28 per share, down 2,660% from last year. According to the financial research firm, Bed Bath & Beyond has a four-quarter average of negative earnings of 4,700%.

Other worrisome factors for the company include the resignation of two key financial executives in recent months, chief accountant John Barresi resigned in May, and Heather Plutino, senior vice president of financial planning, analysis and commercial finance, also left the company.

Subsidiary brand sale Buy Buy According to analysts at Bank of America, the likelihood of having a child is also low. Activist investor RC Ventures, which owns nearly 10% of Bed Bath & Beyond, advocated selling the brand earlier this year, with buyers showing interest. However, analysts don’t think interest will weather these recent downturns. “We continue to face challenges in closing the deal given BBBY’s deteriorating financial position and higher high yield spreads,” they wrote.

Analysts at Riley Securities said they believe a sale or spin-off of the business could open up $1.5 billion to $2 billion in value, but they no longer believe a sale is imminent as the business dries up.

While the retailer is likely to suffer consistent losses for several more quarters, there is still hope, analysts said.

Tritton took over as CEO of Home Goods after stepping down as Target’s chief sales officer in November 2019 and quickly put in place a massive recovery plan.

He announced a major roadmap for store closures, cleared management and led the sale of assets for companies like Christmas Tree Shops and Cost Plus World Market. The company said it will spend about $250 million renovating about 450 Bed Bath & Beyond stores to make in-store shopping easier and merchandise more accessible.

“The turnaround is taking longer than expected due to supply chain issues and entering a more challenging retail operating environment,” analysts at Riley Securities wrote, but “we think Bed, Bath & Beyond is moving in the right direction.”

#Bed #Bath #accused #turning #air #conditioning #stores #save #money #sales #plummet



About the author


Leave a Comment