Bed Bath & Beyond Inc has reported another sales decline in its fourth fiscal quarter, which an analyst attributed to customer confusion caused by its recent merger.

The company’s revenue slid 9.8 per cent year-on-year to $273 million during the quarter ended December 31. Excluding the impact of its exit from Canada, revenue declined 6.4 per cent.

Gross profit was $67 million, a 160 basis-point improvement year-over-year. Net loss narrowed from $81.2 million to $20.8 million.

For the full year, revenue dropped 25 per cent to $1 billion, but net loss improved from $258 million to $84 million.

In a letter to shareholders, executive chairman and CEO Marcus Lemonis attributed the sales decline to the company’s “deliberate decision” to eliminate vendors and SKUs that generated negative contribution margin. 

“We chose margin integrity over headline revenue, and it shows in the results. That discipline strengthened the foundation of the business and materially lowered our breakeven point for profitability as we build from here and look forward to a housing market recovery,” Lemonis said.

“Last year was about stabilizing and building our base. This year is about defining our future and growing,” he remarked.

‘Hemorrhaged revenue’

GlobalData MD Neil Saunders had a more pessimistic interpretation of the results. The analyst said that the integration of the Overstock, Bed Bath & Beyond, Kirkland’s, and BuyBuy Baby brands had not boosted sales but instead caused a “hemorrhage of revenue”.

“On a two-year stack, fourth-quarter revenue is down by 28.9 per cent. Three-year is down 32.4 per cent. Four-year is down 55.4 per cent. And five-year is down 59.2 per cent. The business, with all the additions, is even smaller than Overstock was in 2019.

“Admittedly, some of the softening is down to an unwinding of the exuberance of the pandemic era, when a focus on all things home was very beneficial. There is also the fact that management has recently been cutting some unprofitable categories and SKUs. However, neither of these things accounts for such a dramatic slide over an extended period,” he said.

Saunders said the company had dropped off consumers’ radars due to early brand confusion during the merger, while the proposition remains neither clear nor compelling.

“To be fair, better financial discipline is reducing losses and sales may stabilize next year. And if this happens, it will give the group a more reasonable base from which to build. 

“Even so, we still believe there is an awful lot of work to do to make Beyond the go-to destination for everything home,” he added.

For FY26, the company targets low to mid-single digit top-line growth.