Bathing in bed continues to go beyond, but patience is still required

After its fourth consecutive quarter of improved financial performance, fewer and fewer observers are adding a fourth “B” – for evil – to Bed Bath & Beyond. As has been proven with solid numbers released this morning, those bad days are over and the big box home furnishings retail chain has made huge strides in its ongoing turnaround.

49% revenue growth from a year ago – a quarter when most of its stores were closed and most of its sales came from a still-developing digital sector – and profit adjusted for Its core activity of 0.05 cents a share from a loss a year ago were good indicators that the turnaround managed by a brand new management led by CEO Mark Tritton is showing good results.

The same is true of the improvement in its gross margins, EBITDA and the percentage of sales made through omnichannel and online formats, the latter now representing 38% of its total revenue for the quarter. Its core commodity classifications and buybuyBaby nameplate also performed well and overall exceeded analyst consensus forecasts on its frontline.

All of this has caused the company to drop its forecast for the rest of the year from zero to low, an important target given the number of stores it is closing, 200 over a three-year period. years.

All of this raises the big question that BBB has continued to try to answer since the start of the turnaround: is it enough? The company was still posting a loss for the quarter of 48 cents (down from a loss of $ 2.44 a year ago) and its adjusted profit, reflecting only its retained store divisions, missed the consensus forecast of three cents by action. And the company’s forecasts for the future are not as strong as some of the competition.

Tritton, in an interview, defended the company’s performance in the positive, exuberant style that is quickly becoming his hallmark. Recalling several years of deterioration in performance under previous management, he said, “You have to crawl before you can walk. We are happy with what we have achieved and have gone beyond the previous recommendations that we have published. We are happy with our three year plan.

He said the company’s renovation program – 150 stores targeted this year – is going as planned, including the reopening of its flagship location in Manhattan’s Chelsea neighborhood next month. The limited number of stores that have been renovated so far, including many in the Houston market, have exceeded plan, he said, with average purchases on the rise and positive customer response. He also pointed out that the Baby division is making a comeback with activity up 20% for the quarter, compared to a year ago, when its stores remained open.

Other initiatives that are part of the new strategy include the rollout of “owned” private brands, now up to six; the retailer’s first sustained television advertising campaign focused on the theme of “Happier Home” which will continue on an ad hoc basis; and its ongoing share buyback program, totaling $ 130 million for the quarter.

Bed Bath will continue to face declining revenue reflecting its divestiture of a host of marginal nameplates as well as the odd position of being caught in the day trading speculation driven by social media which has seen several severe peaks in its year stock price.

Tritton says be patient, this was a pretty big hole the business had to dig into. And the company-influenced roller coaster has stocked up? He says that, in a way, it drew attention to BBB who might not have been there otherwise. After taking a closer look at the company, some investors have come to like what they saw and stick around. “Quarter by quarter, we deliver what we said we would do. “