Bed Bath & Beyond (BBBY) posted Q3 revenue of $3.03 billion, which represents a rise of 2.6% from $2.95 billion in the third quarter of fiscal 2017. However, due to lower-than-expected SSSG (same-store sales growth), the company’s revenue fell marginally short of analysts’ revenue expectation of $3.04 billion.
Year-over-year revenue growth
BBBY’s revenue growth was driven by the calendar shift, which resulted in the post-Thanksgiving week fallin in the third quarter, whereas in the previous year, it was included in the fourth quarter. However, some of the sales growth was offset by inventory optimization initiatives taken by the company’s management.
By the end of the quarter, BBBY operated 1,550 stores compared to 1,558 stores at the end of the third quarter of fiscal 2017. In the last four quarters, the company has increased the number of its World Market stores by two units, buybuy BABY stores by four units, and also has opened two One Kings Lane stores. However, during the same period, the unit count of Bed Bath & Beyond stores has declined by 15 units, and the unit count of Christmas Tree Shops has fallen by one unit.
In the fourth quarter, BBBY’s SSSG has declined by 1.8% against analysts’ expectation of a decline of 0.3%. The decline in the transaction at the stores lowered the company’s SSSG, which was partially offset by an increase in average ticket size. During the quarter, the company’s customer-facing digital channels posted strong sales, but the SSSG at its stores declined in the mid-single digits.
Peer comparisons and outlook
During the same period, Williams-Sonoma (WSM) and RH (RH) have posted revenue growth of 4.4% and 7.8%, respectively. Accounting for the shift in the Thanksgiving week to the third quarter and one less week of operation, BBBY’s management expects its revenue to decline in the low double-digit percentage range in the fourth quarter. For 2018, the management expects its revenue to fall by 1.0% with its SSSG also expected to fall by 1.0%.
For fiscal 2019, BBBY’s management expects its SSSG to decline in the low single-digit percentage range with transactions at its stores continuing to fall. Next, we’ll look at BBBY’s margins.