Shares of Bed Bath & Beyond (NASDAQ:BBBY) are in the spotlight, as the company recently disclosed that it had received an information request letter from the Securities and Exchange Commission (SEC) relating to its Form 10-K, or annual report, for fiscal year 2021. Bed Bath submitted the report in February. The information request was dated Sep. 27, although it wasn’t disclosed to the public until last Friday. BBBY stock is down 10% amid the news.
In the letter, the SEC requested more information on how supply chain disruptions affected the retailer during the second half of the fiscal year. The agency also requested details on if Bed, Bath & Beyond has a plan to resolve these disruptions.
In response, interim CEO Lauren Crossen stated:
“As a result, the company does not believe at this time that there is any material direct long-term impacts of the fiscal 2021 supply chain disruptions and thus no significant mitigation efforts have been undertaken.”
Crossen also added that a supply chain disruption mitigation plan wasn’t implemented due to the company’s strategy shift of importing more Owned Brand products from domestic suppliers.
BBBY Stock: SEC Requests Info from Bed Bath & Beyond
Bed, Bath & Beyond experienced several supply chain disruptions last year. During the end of the year, it was reported the retailer’s relationship with several of its suppliers had faltered due to delayed payments. Furthermore, some suppliers reported having unpaid invoices from as far as Jan. That certainly seems to a be a long-term impact from supply chain disruptions.
After receiving the letter, Bed Bath stated that supply chain challenges related to inventory issues had caused a sales decline of $275 million. These issues led to gross margin declining by between 3% and 4% during Q4 due to higher transportation costs.
Meanwhile, Bed Bath has begun adding more supply chain risk factors to its quarterly earnings, which began during Q2 of 2022. The company will also begin to provide its key operating metrics “more uniformly.” This will be in the form of “dollar and basis point impacts to gross margin, supplemental comparable revenue information, and other impacts to selling, general, and administrative expenses.”
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
