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It wasn’t too long ago that Bed Bath & Beyond was presumed by many investors to be moribund. But a surprise jump in comparable sales last quarter fueled by improved e-commerce has renewed faith on Wall Street that the home goods retailer is carving a new place for itself in shoppers’ habits.
Bed Bath & Beyond reported on Thursday that comparable sales, a metric that strips out the impact of stores newly opened or closed, rose 6% in the three months ended August 29th. The source: an 89% jump in web sales that show Bed Bath & Beyond is adapting well to shoppers going online during the COVID-19 crisis. Its digital business is now one-third of total revenue.
Analysts had been expecting comparable sales to dip slightly, and the surprise gain sent Bed Bath & Beyond shares up 30% in morning trading. The company, which has taken big steps to shore up its finances in the last year and switched out much of its c-suite, has now seen shares nearly quintuple since a low in March.
The retailer’s resurgence stems from a deft mix of better merchandise selections as well as quick, effective deployment of services like in-store and curbside pickup for online orders, as well as same-day delivery. While these are now commonplace among big retailers, Bed Bath & Beyond ramped them up quickly.
Bed Bath & Beyond is also benefitting from a wider surge in home goods shopping that is also lifting sales at chains like Target, Williams-Sonoma and Walmart, as at Lowe’s and Home Depot for bigger-ticket items.
“When home is everything, we’re really poised to be the epicenter of that,” CEO Mark Tritton told CNBC. “We were agile about getting after that.”
Bed Bath & Beyond returned to profit in the quarter with a net income of $217.9 million on sales of $2.69 billion, compared to a loss a loss of $138.8 million, a year earlier on sales of $2.6 billion. Overall sales dipped slightly because the company closed some stores.
But the company has helped itself by streamlining its offering which had grown unwieldy, allowing it to reduce what it sells at clearance prices. It also did well with the back-to-college season despite all the uncertainty around students ability to return to campus: sales of items for college dorms rose 21% during the quarter.
Bed Bath & Beyond is also refreshing its store brands under Mark Tritton, the private brand guru who came to the company last autumn from Target. Tritton’s work was crucial to Target’s turnaround, something that will serve Bed Bath & Beyond well as it heads into the holiday season.