Bed Bath & Beyond Earnings: Predictably Awful

The first quarter of Bed Bath & Beyond's (NASDAQ: BBBY) 2020 fiscal year ran from March 1 to May 30. That period roughly corresponded to the peak of the COVID-19 pandemic. As a result, the struggling retailer had to keep most of its stores closed for most of the quarter.

Bed Bath & Beyond was able to drive strong growth in digital sales last quarter, but it wasn't nearly enough to offset the sharp plunge in brick-and-mortar revenue. Furthermore, digital sales are less profitable than in-store sales, mainly due to the cost of shipping. Thus, Bed Bath & Beyond reported dreadful results for the first quarter. While the rest of the year isn't likely to be quite as bad, management will face formidable challenges in trying to return the company to sustainable profitability.

Bed Bath & Beyond's digital sales more than doubled in April and May and grew 82% year over year for the first quarter as a whole. However, the company has historically had fairly low e-commerce penetration, and the pandemic caused in-store sales to drop by 77%. Even high-double-digit e-commerce growth couldn't come close to offsetting this decline in brick-and-mortar sales. Total revenue fell 49% to $1.31 billion, missing the average analyst estimate of $1.39 billion.

Source Fool.com