Tritton Unveils his Plan to Investors for Bed, Bath and Beyond
The new CEO of Bed Bath & Beyond, Mark Tritton - formerly an executive of Target , showed the plan he devised for the mostly brick and mortar retail chain to investors.
Activist investors tired of poor performance persuaded board members to fire the company’s original founders, for Tritton in November. In the 3rd quarter, Bed Bath & Beyond posted a $38.6 million loss compared to its 3rd quarter 2018 earnings of $24.4 million. Sales also fell in the 3rd quarter by 9% to $2.8 billion. 2020 has not been kind to shareholders after the stock fell more than 20% after a disappointing statement that had revealed its December and January sales and margins were declining. The stock is down over 30% in the last 52 weeks.
Having too many options in their stores has led to “purchase paralysis,” Mr. Tritton said Tuesday.
To deal with so-called “purchase paralysis,” Mr. Tritton is intending to cut inventory by more than 10% this year, which is only part of the new plan that is going to cost the company around $400 million to pay for the upgrades to the stores and warehouse management.
“Customers don’t want to do the math,” Mr. Tritton said.
This is not the first time that investors have heard about change and even spent $325 million in 2018 on remodeling stores and upgrading technology. Mr. Tritton goes on to say, “There were 45 objectives that weren’t amounting to anything meaningful. This is an entire reworking of the store experience.”
The new plan for 2020 has the upgrades coming to 25 stores. BBY has also improved its supply chain to lower the amount of time that a product is out of stock.
To help with profitability the company has reached a deal to sell and lease-back some of its real estate holdings for $250 million. Additionally, Mr. Tritton announced that they are divesting itself of 1-800-Flowers for $252 million as they continue to look at options in their noncore business roster, job cuts, and closing stores.
“We are making substantial moves,” Mr. Tritton said. “But we are early in our turnaround. This is phase one.”