By Dhirendra Tripathi
Investing.com – Bed Bath&Beyond stock (NASDAQ:BBBY) plunged nearly 25% in Thursday’s trading as supply chain issues dented its second-quarter sales and forced the retailer to cut its annual guidance.
Prices of raw materials rose, and coupled with higher freight costs, ate into the company’s profits. The retailer just about managed to report an adjusted profit.
According to Bed Bath&Beyond’s President and CEO Mark Tritton, cost inflation escalated by month, “especially later in the quarter, beyond the significant increases that we had already anticipated”.
While both sales and profit at the retailer came in below estimates, the challenging environment wasn’t unique to just Bed Bath&Beyond as the pandemic ravaged through key supply centers like Vietnam and China.
From Nike (NYSE:NKE) to H&M (ST:HMb) to Boohoo (OTC:BHOOY), manufacturers and retailers have reported their sales being held back due to supply chain issues and restricted raw material availability.
Vietnam was forced to order the closure of factories in and around Ho Chi Minh City to curb the spread of the virus. China, too, brought back restrictions in various cities to control the spread.
Second-quarter net sales fell 26% to $1.98 billion as divestitures and closure of stores hurt. Comparable sales fell 1%. Adjusted profit was $4 million compared to $62 million in the second quarter of last year.
Consequently, the company now sees its annual revenue at $8.25 billion at center of the range compared to the $8.3 billion estimate at midpoint it had given on June 30 at the time of its first-quarter results.
Third-quarter net sales are seen at $1.98 billion at midpoint.
The company closed August with 999 stores, including 813 Bed Bath&Beyond outlets, compared to 1,004 and 818 units, respectively, at the end of May.