Why BBBY’s Same-Store Sales Growth Was Lower than Expected



First-quarter performance

During its first quarter, Bed Bath & Beyond (BBBY) posted a fall in SSSG (same-store sales growth) of 0.6% compared to analysts’ consensus expectation of a rise of 0.1%.

The fall in its SSSG was the result of a fall in its number of transactions, which was partially offset by a rise in its average transaction amount.

In the graph above, we can see that the company’s SSSG has been negative for the last five quarters.

BBBY’s SSSG was driven by strong sales from its customer-facing digital channel. However, the SSSG of the company’s stores fell in the mid-single-digit percentage range. One Kings Lane was also included in the calculation of the company’s first-quarter SSSG.

BBBY has been focusing on having an expansive online assortment, offering quality and value to customers, providing a convenient and easy shopping and delivery experience, and increasing awareness among customers to drive its sales.

The company has added 102,000 decorative furnishing SKUs to its website since the beginning of 2017. The company has also enhanced the navigation and filters on its website to improve the findability of its products. BBBY has been remodeling its stores to next-generation stores to enhance the customer experience. The company remodeled four stores and expects to remodel another 15 by late fall. To enhance convenience, BBBY has been investing in building its capabilities to use 3D images. Along with these initiatives, the company has been working on providing personalized experiences to drive its sales.

Peer comparison and outlook

During the same period, Williams-Sonoma (WSM) and RH (RH) posted SSSGs of 5.5% and 1.0%, respectively.

For 2018, BBBY’s management expects its SSSG to be in the low-single-digit percentage range.

Next, let’s look at BBBY’s first-quarter margins.

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