Bed Bath & Beyond Closing 150 Retail Stores
Bed Bath & Beyond will be undergoing a serious strategic overhaul as it seeks new funding, sheds costs, and realigns on its store, merchandising, and inventory initiatives. The massive undertaking also includes changes to the company’s core leadership structure.
As part of these changes, Bed Bath & Beyond is eyeing costs, trimming where it can and searching for new funding that will provide stability. Due to this, the company will be closing an estimated 150 lower-producing Bed Bath & Beyond banner stores. Bed Bath & Beyond will also be cutting several jobs, about 20% across the corporate and supply chain workforce. It will continue to evaluate its portfolio and leases, as well as staffing.
Second Quarter Financials and 2022 Expectations
Second Quarter Results
- Net sales: $1.45 billion
- Comparable sales decline: 26% YoY
- Free cash flow usage: $325 million
2022 Predictions
- Comparable sales decline in the 20% range driven by improvements in the second half of fiscal 2022 versus the first half of fiscal 2022
- Adjusted SG&A expense approximately $250 million below last year reflecting cost optimization actions occurring in the second half of fiscal 2022
- Capital expenditures of approximately $250 million versus the original plans of approximately $400 million
The company is also making significant reductions across its cost structure, which will reflect immediately across merchandising, inventory, and traffic. Longer-term initiatives are being put on hold, and the company plans to slow on owned brands development.
The brand has also further reduced its capital spending. Planned capital expenditures are now forecasted to be $250 million, compared to the $400 million previously disclosed.
In order to improve its footing, Bed Bath & Beyond has secured more than $500 million in new financing, and is preparing to sell off $12 million shares of common stock with proceeds going toward corporate purchases including repayment of debt.
A Renewed Focus
Bed Bath & Beyond is pivoting, reducing its share of owned brands to focus on bringing back popular national brands and introducing emerging direct-to-consumer brands. The company plans to discontinue three of its nine owned brand labels: Haven, Wild Sage, and Studio 3B.
Additionally, consumers can expect to see a noticeable decrease in the remaining owned brands on store shelves — the company is reducing these to 20 percentage points for a more balanced sales-to-stock ratio. With these changes, the company expects to increase inventory penetration by 20 percentage points over the long term.
The brand plans to continue with strategies that have proven profitable, including its loyalty program, Welcome Rewards, which has increased new membership by 20% — currently 5 million total members.
[Read more: Bed Bath & Beyond Investing in Loyalty and Merchandising Efforts]
Additionally, in order to improve access to products, the company is hosting a supplier event in early Fall to build new relationships and strengthen existing ones. Lastly, the company has reviewed the value of its buybuy BABY brand and will continue strategies to “accelerate further growth and unlock the brand's full potential including building on its digital and registry platforms, addressing additional age groups, and expanding products and services.”
New Leadership
Although Sue Gove is currently at the helm as director and interim CEO, the company is actively searching for its next CEO. As part of the ongoing shifts, the company has eliminated the chief operating officer and chief store officer roles. John Hartmann and Gregg Melnick will be departing the company.
"We are embracing a straight-forward, back-to-basics philosophy that focuses on better serving our customers, driving growth, and delivering business returns. In a short period of time, we have made significant changes and instituted enablers across our entire enterprise to regain our dominance as a preferred shopping destination for our customers' favorite brands and exciting products,” said Gove. “We command a special presence in the Home and Baby markets, and we intend to fulfill our opportunity to be the category retailer of choice."
The company has tapped Mara Sirhal as executive vice president and brand president, and has promoted Patty Wu to EVP and president of buybuy BABY. Under the brand president roles, both individuals will oversee each banner’s merchandising, planning and allocation, brand marketing, and stores. These roles will report to Gove.
Sirhal was most recently the company's EVP and chief merchandising officer for the Bed Bath & Beyond banner. She joined the company in January 2021 as SVP and general manager for Harmon, leading operational business strategies. Sirhal has been in the retail industry for nearly 20 years across merchandising, product development, planning, digital, inventory management, supplier diversity, and leased businesses at Macy's, Inc.
Wu joined the company in January 2021, most recently serving as buybuy BABY’s SVP and general manager. Prior to this role. Wu held several executive leadership positions across retail and business, including chief commercial officer of Beautycounter, chief commercial officer and general manager of the Baby Division at The Honest Company, and senior management roles at Mattel, Inc. and Walmart.
"We are working swiftly and diligently to strengthen our liquidity and secure our path for the future. We have taken a thorough look at our business, and today, we are announcing immediate actions aimed to increase customer engagement, drive traffic, and recapture market share,” said Gove.
“This includes changing our merchandising and inventory strategy, which will be rooted in National Brands. Additionally, we are focused on driving digital and foot traffic, as well as optimizing our store fleet. We believe these changes will have a widespread positive impact across customer experience, inventory assortment, supply chain execution and cost structure,” added Gove. “The customer underpins our decisions, and we are committed to delivering what they want while driving growth, profitability, and financial returns."
