Bed Bath & Beyond said net sales plummeted 33% in its fiscal third quarter, as the retailer struggles to stay afloat. Digital sales also fell 33%.

The retailer reported a net loss for the quarter ending Nov. 26, 2022, of $393 million. That’s a widening of 29.7% from the $276.4 million loss in the comparable quarter of 2021. Furthermore, the Q3 loss is worse than the retailer’s projection last week of a $385.8 million loss.

The dismal earnings report comes just days after Bed Bath & Beyond warned it was considering filing for bankruptcy protection.

In a call today with analysts, interim CEO Sue Gove read a prepared statement expressing confidence the retailer would bounce back. She declined to take questions during the call.

“Our business was built around our loyal customers. Listening and responding to their preferences was at the center. Veering away from that path has led to our recent financial performance,” Gove said. “We have taken aggressive action to change the elements of our business that are not aligned to what our customer wants. We are rebuilding our assortment to serve our customers’ needs by leading with national brand and reducing our own brand merchandise at the Bed Bath banner.”

Bed Bath & Beyond ranks No. 30 in the Digital Commerce 360 Top 1000.

Consumer perception of Bed Bath & Beyond

Katie Thomas, who leads the Kearney Consumer Institute, says deep changes in consumer demand and perception could account for much of the retailer’s woes. The institute is an internal think tank at strategy and management consulting firm Kearney.

“During the pandemic, we saw consumer habits change, with once-popular stores falling off the list of where to shop,” Thomas says. “Some retailers were distracted by what made others successful, from fast shipping to private label, and lost their ‘reason for being’ to their own consumer. Others continue to get spun up in the idea that consumers want cheap prices, but under-account for the fact that they are often not interested in cheap quality.”

Inventory problems at BBBY

Another issue for Bed Bath & Beyond has been inventory. Suppliers have hesitated to do business with the retailer as its financial situation worsened.

“In the early part of 2022 all the way until about June, Bed Bath and Beyond’s inventory levels were high across six key categories — in fact, second only to Lowe’s. But from there, and we can only speculate why, they started to go down and didn’t head back up until the holiday season,” says Krishnan Thyagarajan, president and chief operating officer of Dataweave, which provides data analytics services to retailers. “Across six key categories, Bed Bath & Beyond’s average product availability was 53% in December, significantly lower than its closest competitors’ average availability at the same time, trailing the next lowest, Kohl’s, at 61%, as well as compared to its own availability at 77% back in June. This was sure to have significant negative impact on their calendar Q4 revenue because of lost consumers and sales.”

Foot traffic

Foot traffic analytics firm Placer.ai said that Bed Bath & Beyond isn’t seeing much success in getting shoppers back in stores. In December 2022, visits were down 26.5% compared with December 2021. And in November, visits were down 23.1% compared with the same month a year prior.

Death of another category killer

The financial woes of Bed Bath & Beyond are the latest example of a massive, long-term shift in the nature of retail. Bed Bath & Beyond was once one of the primary “category killers” — retailers that specialized in a single category of goods, built giant stores with enormous parking lots, and priced aggressively. Bed Bath & Beyond, Staples, Barnes & Noble, and the retailer credited with creating the category killer model — Toys R Us — crushed smaller business across the nation throughout the 1980s and 90s.

But the once-feared category killers have struggled to compete against ecommerce vendors — particularly Amazon — that eschewed stores and real-estate.

“The so-called ‘category killer’ had long-time benefits for the consumer, where consumers could peruse options and brands and purchase multiple products in one trip,” says Thomas. “However, with the advent of online and growth of big box retailers, the role of the physical store and its large merchandise selection changed. We’ve seen chains from Best Buy to Barnes & Noble evaluate how to evolve their offering — from increased services to simplifying the product selection — to keep up with the consumer’s needs.”

Bed Bath & Beyond’s decline

Years of management missteps and a dysfunctional corporate culture plagued Bed Bath & Beyond. But recent months have seen things worsened.

In September, Bed Bath & Beyond’s chief financial officer died by suicide. Shortly before that, Chewy founder and activist investor Ryan Cohen had sold his entire stake in the retailer. Cohen had driven Bed Bath & Beyond shares higher during the meme stock craze. Shares fell 40% in the wake of Cohen’s action. Unsurprisingly, Bed Bath & Beyond soon announced it had another dismal quarter.

Comparable store sales declined 31% versus the fiscal 2021 third quarter. By banner, comparable sales fell 34% at Bed Bath & Beyond. They declined in the low-twenties at Buy Buy BABY compared to the prior year period.

For the quarter ended Nov. 26, Bed Bath & Beyond reported:

• A net loss of $393 million. That’s a widening of 29.7% from the $276.4 million loss in the comparable quarter of 2021.
• Net sales of $1.26 billion, a decline of 33% from a year earlier.
• Digital sales also fell 33%, but the retailer did not release dollar figures for ecommerce sales.

BBBY’s full Q3 earnings report can be found here.

Percentage changes may not align exactly with dollar figures due to rounding.

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