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Macy's holiday lulls; Bed Bath & Beyond, Boxed on the brink

The first week of 2023 brought warnings of trouble for retailers.

Macy's holiday lulls; Bed Bath & Beyond, Boxed on the brink

Bed Bath & Beyond (Providence Place ,Providence, Rhode Isl… | Flickr (www.flickr.com)

The post-holiday fallout is coming swiftly as retailers brace for a difficult environment in 2023. In the first week of the year, several retailers issued warnings about lackluster sales, and said they were exploring options to save their businesses. Here’s a look:

Macy’s warns of soft holiday quarter

Macy’s issued a warning that sales during its holiday quarter would be light, while it anticipates the consumer to be “pressured” this year.

In a Friday update on the fourth quarter issued prior to its earnings call, Macy’s said sales for the fourth quarter are likely to be at the low-end to mid-point of its forecast, between $8.16 and $8.4 billion. Inventories, meanwhile, are expected to be slightly below 2021, and down mid-teens relative to 2019.

“Black Friday/Cyber Monday sales were in line with our expectations, while the week leading up to and following Christmas were ahead. However, the lulls of the non-peak holiday weeks were deeper than anticipated, CEO Jeff Gennette said. “Overall, our occasion apparel and gift-giving business were strengths and inventory composition and price points aligned with customers' needs.”

Gennette added that Bloomingdale’s and Bluemercury “continued to outperform” expectations.

Coming ahead of its full earnings report in March, the update also sought to set expectations for the coming year, in which the toll of inflation and interest rates is expected to dampen consumer demand for discretionary purchases.

“Based on current macro-economic indicators and our proprietary credit card data, we believe the consumer will continue to be pressured in 2023, particularly in the first half, and have planned inventory mix and depth of initial buys accordingly.

The update followed news on Wednesday that Macy’s is planning to close four physical stores. Axios reported that the closures are part of the company's transformation strategy, which was first announced in 2020. The mall-based locations include Los Angeles, Fort Collins, Coloardo; Hawaii and Gaithersburg, Maryland.

Bloomingdale’s said earlier in the week that it will open a new small-concept Bloomie’s location in Seattle later this year. Macy’s also introduced a third-party marketplace ahead of the holiday season in a bid to boost its assortment.

Bed Bath and Beyond on bankruptcy watch

Bed Bath & Beyond issued a warning that it is pursuing a number of options to keep itself afloat, and may have to enter bankruptcy.

The home retailer said its leadership “concluded that there is substantial doubt about the Company's ability to continue as a going concern,” according to an update. Some of the potential options include bankruptcy protection, a sale of assets and pursuing additional capital. However, the company said, “These measures may not be successful.”

The company said it is expecting earnings of $1.26 billion for its quarter ended Nov. 30, compared to $1.8 billion for the same period a year ago. Its net loss is expected to be $385.8 million.

Bed Bath & Beyond joined GameStop as a meme stock in early 2021, but has been in the headlines for struggles with its business since then. It replaced CEO Mark Tritton, a former Target exec who was brought into refresh the company, with Sue Gove last year, and overhauled the executive team. In August, it took more than $500 million in new financing in August and said it would close 150 stores.

One recent issue was traced to inventory. Many retailers were working through problems with overstock during the last year as a result of a glut of merchandise wrought by supply chain challenges, but Bed Bath & Beyond reported trouble filling shelves.

“Despite more productive merchandise plans and improved execution, our financial performance was negatively impacted by inventory constraints as we partnered with our suppliers to navigate both micro- and macro- economic challenges,” Gove said in a news release. “Reduced credit limits resulted in lower levels of in-stock presentation within the assortments that our customers expect. Consequently, we have already leveraged the liquidity gained from the holiday season to immediately pursue higher in-stock levels with support from our key vendors. We have seen trends improve when in-stock levels have increased.”

​Boxed weighs a sale

Ecommerce platform Boxed is considering options including a potential sale of the company or raising additional capital in the next 45 days, the company wrote on Thursday. The company said it is not planning additional communication “unless and until” there is a deal in place.

The company, which delivers wholesale bulk pantry items to individuals and businesses without requiring a membership, had previously issued a warning from the New York Stock Exchange after its share price fell below $1 in the fall.

Boxed reported that net revenue fell 15% in the third quarter of 2022. This was driven by a decline in software revenue, which comes from enablement technology that the company provides along with its delivery service. Software revenue was $100,000 during the period. The company said it did not see any implementation services or up-front license fee revenue in this category.

The company’s net loss ballooned to $26.4 million, rising more than 4x from about $6 million in the same quarter of 2021. In terms of liquidity, the company had $39.4 million in total cash balance.

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