As mentioned in my previous articles on, an on-brand omnichannel approach has become a pre-requisite to even compete in this new retail environment. In terms of marketing, the company is trying to re-establish its “top home retailer” image with consumers.
#Bed bath and beyond merchandise credit balance software#
The company spent $42 million in the quarter on technology projects such as inventory management software to facilitate this shift. This development puts it in line with services being offered by other retailers like Best Buy ( BBY) and Target. By the end of May, the company was “offering a “Buy online, Pick-up in-store” model for 60% of store locations. This shift doubled the fulfillment capacity for the company’s digital channels and could be a model approach moving forward. The pandemic has accelerated the company’s plan by forcing it to re-align its logistics and convert 25% of its stores into fulfillment centers. The company is planning to shift to a more omnichannel approach and heavily lean on digital. The more pressing questions are what strategic shifts does the company plan to undertake moving forward? Luckily, I think management is on point so far with their strategy. The closing down of underperforming stores, however, is only the first step of the turnaround process. Furthermore, the company is also making efforts to reduce the cost of goods sold and improve its sourcing and supply chain. In addition, as a cost-saving measure, the company is also cutting 5% of its workforce. The company expects to generate $250 million - $350 million in SG&A cost savings from these efforts.
I believe that closing down “underperforming” stores and businesses is a necessary first step to execute a turnaround. The company also recently completed the sale of for $245 million. The company plans to close down 200 stores over the next two years, which is roughly 15% of its 1,478 stores across the US and Canada. In fact, the company announced a tender offer for $300 million of its debt, indicating confidence in the environment moving forward.ĭuring Q1 2020, the company has also closed down 21 stores as part of the overall effort to “right-size” its store footprint. Luckily, it seems as though this quarter was the worst of it as store sales have improved in Q2 2020. During the quarter, the company had a cash burn from operations of $394.6 million. The company has $1.2 billion in cash and other investments and secured an additional $850 million credit facility. While the company is heavily indebted with long-term debt of $1.7 billion, it does have enough cash to at least survive until next year. In even more good news for the firm, nearly 40% of all online orders were placed by customers new to the Bed Bath & Beyond web portal with 10% of online sales from customers new to Bed Bath & Beyond. In fact, the company disclosed for the quarter sales from digital channels represented two-thirds of the $1.3 billion in total sales. A silver lining in these results though is that Net Sales from digital channels grew by 82%. Net Sales decreased by 49% due to temporary store closures. In terms of Q1 2020 results (ended May 2020), like most brick and mortar retailers, results suffered due to the coronavirus pandemic and subsequent lockdown orders. However, ultimately, this may turn out to be a blessing in disguise for the beleaguered retailer.
Right of the gate, the company’s turnaround plans have hit a snag due to the coronavirus pandemic. The company recently assembled a strong executive team in order to carry out the task of this turnaround. In late 2019, the company brought in Mark Tritton, a former Target ( TGT) executive, as CEO in an effort to change the fortunes of the company. Bed Bath & Beyond’s difficulties in recent years have come from a myriad of factors such as mismanagement of inventory, outdated store concepts, directionless brand positioning among many others. However, the company has suffered declining sales in recent years as one of the victims of the so-called “retail apocalypse”.
Traditionally, the company sold its products on its namesake big-box stores. Just a brief background on the company, Bed Bath & Beyond is a retailer of home furnishings, bath fixtures, and other domestic merchandise. I wanted to examine the company's plans to see if the company is worth investing in. One such company that is looking to turn its fortunes around is Bed Bath & Beyond ( BBBY). However, there is an opportunity for companies to thrive in this type of environment, provided they have the right approach and strategy. The retail industry has been going through a bit of an upheaval in the past few years with this trend accelerated by the coronavirus pandemic.
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