Bed Bath & Beyond’s second quarter earnings went beyond expectations.
The home goods retailer saw its net income rise to nearly $218 million from a loss of about $139 million last year, company executives reported on a Thursday earnings call covering the period from May 31 to Aug. 29. That growth was largely driven by digital sales, which surged 89 percent.
Still, in-store sales experienced a 12 percent decline. The company is on track to close 200 of its “less productive” stores, according to CFO Gustavo Arnal. That move was first announced in July, and a third of the stores will shutter by the end of the year.
The closures are based on poor performance, proximity to another store and burdensome lease agreements. Company executives see the consolidation as necessary and expect customers to transition to Bed Bath & Beyond stores that remain open.
“Our physical stores are a strategic asset to us,” CEO Mark Tritton said on a call with investors.
Bed Bath & Beyond was hit hard by the pandemic, but was freed from old debt as it retired about $500 million through a bond tender offer and repaid a bank loan. During the second quarter, the retailer generated a cash flow of over $750 million, and now has $2.2 billion in cash, which should help it through the ongoing health crisis.
New openings are also on the way, with three new BuyBuy Baby locations due to open soon. During the second quarter, the company opened one new Bed Bath & Beyond location and one BuyBuy Baby store.
In total, the company operates 1,476 stores, including 955 Bed Bath & Beyond locations. It is also the parent company of World Market, Christmas Tree Shops and Harmon Face Values.