Bed Bath & Beyond Has First Yearly Loss, Sales Decline as a Public Company -- Update
By Maria Armental
Bed Bath & Beyond Inc., under pressure to turn around operations, reported its first annual loss and sales decline in its nearly three decades as a public company.
The home-goods retailer posted a 2.6% sales decline and swung to a $137.2 million loss in the year ended March 2. The year before it reported a profit of $424.9 million.
Executives from the home-goods retailer, which is in a proxy battle with group of investors seeking to overhaul its board and replace the chief executive, urged patience on Wednesday as they sought to assuage Wall Street that they can improve the company's fortunes.
Bed Bath & Beyond is opening of a series of so-called lab stores to test assortments and displays and is introducing several private-label home-furnishing brands to improve sales. It also plans to adjust its coupon policy and raise the free-shipping order minimum by $10 to $39, company executives said Wednesday.
Bed Bath & Beyond has faced criticism from Legion Partners Asset Management LLC, Macellum Advisors GP LLC and Ancora Advisors LLC, which control a combined stake in the company of about 5%. The investors have said the company failed to adapt over time and allowed costs to increase, eroding value for shareholders. They also called for Chief Executive Steven Temares to be replaced and nominated a slate of directors for the board.
The company on Wednesday named a new lead independent director and pledged additional changes to its board, governance structure and compensation practices. It also raised its quarterly dividend by 1 cent a share to 17 cents.
Driving the losses in the most recent quarter and fiscal year was a roughly $500 million goodwill and trade-name impairment charge.
"It's primarily the market capitalization of the company, not the performance of the company," Chief Executive Steven Temares told analysts during a conference call. As of Wednesday, shares in the company are down about 78% from their January 2014 high.
Shares fell 10% to $17.44 in after-hours trading.
The company said it expects to return to profitability this year, projecting profit of $2.06 to $2.15 a share, a range higher than analysts had expected.
Sales, however, are expected to fall to a range of $11.4 billion to $11.7 billion from the $12.03 billion generated last fiscal year. Next year, the company expects sales to remain roughly flat.
In the latest period, the company reported a loss of $253.8 million, or $1.92 a share, compared with a profit of $194 million, or $1.41 a share, a year earlier. Excluding the impairment charge, the company's fourth-quarter profit was $1.20 a share.
Revenue fell 11% to $3.31 billion from $3.72 billion a year earlier. Same-store sales slid 1.4%, which was a sharper decline than analysts had expected.
Bed Bath & Beyond was founded in 1971 by Leonard Feinstein and Warren Eisenberg, who share the board's chairmanship. When it went public in 1992, it had 34 stores. It now has more than 1,500.
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