Bed Bath & Beyond stock falls on inventory struggles, sales slump

Yahoo Finance Live’s Akiko Fujita and Brian Cheung discuss the Bed Bath & Beyond stock dip amid fourth quarter earnings.

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BRIAN CHEUNG: A company that is still using quarterly jargon at least is Bed Bath & Beyond, which we want to highlight also reported earlier this morning. The shares currently down about 3%, although in the beginning of the trading session this morning we actually saw shares down as much as 10%. Company swing and a miss on both revenue and earnings per share.

And I want to show you another graphic that we have that shows the breakdown of some of the business lines that we've seen in this particular company for the fourth quarter of 2021. Again, Bed Bath & Beyond; bedding down 18%; the bath down 17%; and the beyond, like indoor decor, down 20%; home organization, down 18%. So hard to find a silver lining in this specific one, Akiko.

AKIKO FUJITA: I mean, they have no inventory, right? I mean, isn't that-- that seems to be the number one thing that stood out to me looking through the earnings transcript here, listening to the call. And there are a number of issues, yes, that aren't specific to Bed Bath & Beyond. Obviously, supply chain issues, there has been delays at the ports. I'm looking at this language here, Brian, our not available to sell inventory remained high at 30%. Does it mean 30% of products don't have the inventory that's needed to be sold in stores? That's not necessarily a good picture here.

And the other thing, Brian, that kind of relates to what we were talking about yesterday, when we talk about higher prices, at what point customers start to pull back and say maybe I don't need this right now. That was kind of reflected in what we heard from CFO, Gustavo Arnal, who said we're starting to see emerging uncertainty related to consumer sentiment based on market and retail indicators. So not only are they not able to meet the demand because the inventory isn't there, they're starting to see customers who are saying maybe I don't want to shell out this money right now because of price pressures in other areas. So either way you slice it, it's not good for Bed Bath & Beyond.

BRIAN CHEUNG: I mean, but here's the thing, right, you can point to either of those factors for any of the other retail companies that will be reporting this season. And I think that's where we, and on this show, we're going to do that, will have to parse through what's the better excuse here? Because you also acknowledge, and we talked about this with Anthony Chukumba yesterday, there have been secular issues with Bed Bath & Beyond aside from supply chain issues during this pandemic that have faced this company.

When you think about the idea of people no longer needing to go to a physical Bed Bath & Beyond to buy, for example, a soap dispenser, you could just go to Amazon, you can go to so many other places to do that. And I think that when we talk about Bed Bath & Beyond, they might be saying, well, our sales are down in this quarter because well, we just can't get more soap dispensers. I'm not sure how you can attribute that to that or to consumer demand that's just not there anymore for reasons that are completely unrelated to the pandemic.

So we're going to hear this excuse as the demand story ends up becoming part of these earnings calls by management, but you really got to parse through the smoke I feel like as we get through this earnings season with some concern, especially from J.P. Morgan Chase as well, that perhaps customer demand is on the verge of perhaps starting to come down.

AKIKO FUJITA: Well, the company will continue to say, and a company as in Bed Bath & Beyond, that they are in a transition period. The reality is they're not moving quickly enough. And now that we're starting to see demand pullback, either way, it's not a good look. And to your point, you know, is it because they just didn't foresee this, they didn't have the proper tracking in place? I mean, these are all questions that investors will continue to be putting to the company.