(Crankers) Reportedly, Bed Bath & Beyond (BBBY) is currently dealing with cooled momentum and heated customers at its stores, as a new report claims that the company has cut back on air conditioning in an effort to quickly lower expenses to make up for a slump in sales.
But on the other side, Bed Bath & Beyond said that any changes in store temperature guidelines did not come from corporate. “We’ve been contacted about this report, and to be clear, no Bed Bath & Beyond stores were directed to adjust their air conditioning and there have been no corporate policy changes in regard to utilities usage,” a representative said.
But store visits report mounting concerns anyway, including labor hours that have been meaningfully cut, scaled back utilities, reduced store operating hours and canceled remodeling projects. Also, rewards programs have been scaled back and replaced. It is expected by the analysts that Bed Bath & Beyond’s management will soon announce more store closures and halt openings of its Buy Buy Baby stores.
At the same time, fire sales and price reductions run rampant, as the company continues to offer elevated promotions including up to 50% off bedding and furniture, free same-day shipping, $10 off a $30 purchase and 20% off purchases by college students and their parents.
But those sales promotions are not seen by the analysts at Riley Securities as doing much to help. Citing a decrease in-store traffic, they significantly reduced their price target for the retailer’s stock from $17 to $7. They said that an easing of previous restrictions means a lower demand for home goods and supply chain problems have led to a lack of inventory to attract customers. The analysts noted that competitors such as Walmart and Target have seen their traffic remain steady, while Bed Bath & Beyond is pacing down 20% to 30% year-over-year.
Mark Tritton, the CEO of Bed Bath & Beyond, said the unavailability of certain products caused by supply chain kinks resulted in about $175 million of lost sales during the period.
Sales will drop another 20% this quarter, Bank of America analysts believe. “The company has been under-performing the industry and we think consensus estimates [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, a 2,660% decline from the last year. According to the financial research firm Bed Bath & Beyond has an average trailing four-quarter negative earnings surprise of 4,700%.
While the resignations of two key financial executives in recent months, John Barresi, who was the chief accounting officer and Heather Plutino, who was the senior vice president of financial planning and analysis and commercial finance, are other troubling factors for the company.