Bed Bath & Beyond Tumbles on Signs of Holiday-Season Slowdown

(Bloomberg) -- For Bed Bath & Beyond Inc., Christmas may have come early -- but that’s not good news.

The home-furnishings retailer’s stock plunged as much as 13 percent on Thursday after Chief Financial Officer Susan Lattmann said that heavy promotions may have spurred holiday spending in November -- at the expense of December sales.

The comment suggests “business may have slowed a bit in December,” Jefferies LLC analyst Daniel Binder said in a note to clients. “Management is taking actions to improve sales and profitability, but it remains unclear when/how much these initiatives will begin to bear fruit.”

Many consumers also are buying home essentials online, forcing Bed Bath & Beyond to retool. It’s trying out new store formats for a more personalized experience, and expanding services such as gift registries -- a bid to tap into higher household spending for life events that include weddings and childbirth.

On the bright side, November sales were a bit better than expected. On a same-store basis, they fell 0.3 percent in the quarter ended Nov. 25. That was less than the estimate of a 2.5 percent drop, according to Consensus Metrix. Profit of 44 cents a share exceed analysts’ average estimate of 37 cents.

But investors remain concerned about the future results, sending the shares down to as low as $21.37 on Thursday. Through Wednesday’s close, they had lost almost 40 percent of their value this year. The share drop was the largest since Sept. 20 -- the day after the company’s previous report.

“Results show the difficulty of attracting customers given shifting shopping patterns toward e-commerce and differentiating its merchandise, with many core home essentials available on competitors’ websites,” Cristina Fernandez, an analyst with Telsey Advisory Group, said in a note.

To contact the reporter on this story: Jonathan Roeder in Mexico City at jroeder@bloomberg.net.

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net.

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