Bed Bath & Beyond Inc. has reported fourth-quarter fiscal 2021 results, wherein the top and bottom lines not only missed the Zacks Consensus Estimate but also declined year over year.

Results were affected by the global supply chain, adverse impacts of the Omicron variant, and geopolitical turbulence, which dampened consumer confidence. The lack of available inventory also weighed on results. The same is expected to persist in early fiscal 2022. However, better product margin associated with its Owned Brands, pricing and promo optimization remained upsides. The Zacks Rank #3 (Hold) company remains on track with its transformation plans.

Despite the drab quarterly results, shares of BBBY declined 12% on Apr 13. The stock has plunged 26.7% in a year compared with the industry’s 21.7% decline.

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Q4 in Detail

Bed Bath & Beyond reported an adjusted loss of 92 cents per share in the fiscal fourth quarter against earnings of 40 cents in the year-ago quarter. The figure also missed the Zacks Consensus Estimate of earnings of 3 cents.

Net sales of $2,051 million declined 22% year over year and missed the Zacks Consensus Estimate of $2,085 million. Core banner sales fell 14% year over year due to non-core banner divestitures and sluggishness in Bed Bath & Beyond banner sales.

Comparable sales (comps) fell 12% year over year and 8% on a two-year basis. For stores, comps declined 8% year over year, while the same dropped 18% across the digital channel.

The Bed Bath & Beyond banner’s comparable sales fell 15% year over year and 9% on a two-year basis, owing to the weakness in key categories. These include Bedding, Bath, Kitchen Food Prep, Indoor décor, and Home Organization, representing two-thirds of total Bed Bath & Beyond banner sales.

On the flip side, the company’s buybuy BABY banner’s comparable sales grew year over year in low-single digits, marking the fifth successive quarter of growth. This was mainly driven by double-digit growth in stores, offset by a mid-single-digit decline on the online front.

The adjusted gross profit slumped 31.3% to $589.8 million in the fiscal fourth quarter. However, the adjusted gross margin contracted 400 basis points (bps) to 28.8% due to the dismal merchandise margin, supply-chain headwinds, elevated freight and shipping costs, and higher-than-anticipated inflation.

SG&A expenses slumped 10.5% to $682.6 million in the reported quarter, driven by reduced costs stemming from the sale of non-core assets along with lower rent and occupancy expenses. Adjusted SG&A expenses, as a percentage of sales, increased 420 bps to 33.3% in the quarter under review.

Adjusted EBITDA was negative $30 million against $168 million reported in the year-ago period. The decline was mainly due to sluggish sales. The adjusted EBITDA margin contracted 780 bps year over year to 1.4%.

Financial Position

Bed Bath & Beyond ended the fiscal fourth quarter with cash and investments of $439.5 million. Long-term debt totaled $1,179.8 million and total shareholders' equity was $174.1 million as of Feb 26, 2022. In the fiscal fourth quarter, cash used in operating activities was $282.6 million and capital expenditure was $121.7 million.

The company repurchased shares worth nearly $230 million in the quarter under review and $40 million in March 2022, thereby completing its three-year share repurchase program of $1 billion announced in November 2021. It also had strong liquidity of $1.4 billion as of Feb 26, 2022.

Store Updates

In the reported quarter, the company opened one Bed Bath & Beyond store and one buybuy BABY store, while it shut down five stores.

Looking Ahead

Management issued a fiscal 2022 view. The company expects comparable sales in the second half of fiscal 2022 to improve on a sequential basis, driven by potential improvement in supply-chain conditions. The adjusted gross margin is likely to expand slightly, owing to the aforementioned factor. Adjusted SG&A expenses are predicted to remain flat year over year. This includes the earlier announced optimization plan worth $100 million to mitigate inflation. Adjusted EBITDA is envisioned to rise in the second half of fiscal 2022.

Stocks to Consider

Here are three better-ranked stocks to consider — Nordstrom (JWN Quick QuoteJWN - Free Report) , Tapestry (TPR Quick QuoteTPR - Free Report) and Boot Barn Holdings (BOOT Quick QuoteBOOT - Free Report) .

Nordstrom, a leading fashion specialty retailer in the United States, presently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 13.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Nordstrom’s current financial-year sales and EPS suggests growth of 5.7% and 180%, respectively, from the year-ago period’s reported numbers. JWN has an expected EPS growth rate of 6% for three-five years.

Tapestry, the designer and marketer of fine accessories and gifts for women and men in the United States and internationally, presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 28.2%, on average.

The Zacks Consensus Estimate for Tapestry’s current financial-year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s reported numbers. TPR has an expected EPS growth rate of 12.5% for three-five years.

Boot Barn, which provides western and work-related footwear, apparel and accessories, currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 47.1%, on average.

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago period’s reported figures. BOOT has an expected EPS growth rate of 20% for three-five years.