In a letter to shareholders sent by board chairman Patrick Gaston and interim CEO Mary Winston, Bed Bath & Beyond stated it was advancing on its strategic objectives including consolidation of non-core business at a time when there is speculation that the company will begin to sell at least some assets.
In addition, the letter indicated that the company is getting closer to naming a permanent chief executive officer.
The letter stated that Bed Bath & Beyond’s board and management had aligned behind four key priorities interim CEO Mary Winston communicated during the company’s first quarter 2019 earnings conference call and at its annual meeting earlier this summer. She identified those as refining Bed Bath & Beyond’s organization structure as well as stabilizing and driving top-line growth, resetting the cost structure, and reviewing and optimizing the company’s asset base, including the portfolio of retail banners.
Bed Bath & Beyond, the letter stated, is building on priorities including:
- Stabilizing and Driving Top-Line Growth. The company has undertaken a rapid refresh of nearly 160 Bed Bath & Beyond stores that it expects to finish before the 2019 holiday season. The company designed the multi-million-dollar initiative as a clearly visible upgrade that would favorably impact the in-store shopping experience. Longer term, Bed Bath & Beyond has undertake a comprehensive store renovation program in conjunction with its customer-facing digital channels as well as marketing and loyalty initiatives.
- Resetting the Cost Structure. Bed Bath & Beyond anticipates that cost savings from a comprehensive lease renewal effort and the corporate workforce reduction announced in late July 2019, as well as other near-term actions, to cut costs by tens of millions of dollars, boost margins and create a more effective organization. Substantive change in sourcing and buying will increase the penetration of private-label offerings, with the shift yielding significant cost savings over the next two to three years while providing further product differentiation and an improved margin structure.
- Reviewing and Optimizing the Asset Base. Over the upcoming 18 months, Bed Bath & Beyond will execute an aggressive reduction of up to $1 billion of inventory including the removal of excess aged merchandise from stores before the 2019 holiday season. The company intends to quickly reset inventory levels in both stores and distribution centers while refreshing assortment, providing for newness and incorporating higher-margin products, all in an effort to drive customer traffic and support top-line performance. The company is evaluating the Bed Bath & Beyond store portfolio to create a better balance between physical and digital presence within the markets it serves to deliver a more customer-centric shopping experience. It will take advantage of a heavy lease expiration cadence over the next couple of years to close underperforming stores or relocate stores to improve sales and profitability on a per-unit basis. Bed Bath & Beyond also is reviewing the strategic alignment of non-namesake business concepts, assessing ways to better align or create value from the various banners.
In order to streamline the review of the strategic alignment, the company moved the reporting structure of all the non-core store concepts to fall under one leader in conjunction with other corporate workforce changes made in late July. A Bed, Bath & Beyond spokesperson identified that leader as Bill Waltzinger, who now is president/Bed Bath & Beyond Business Units. The company is working with outside advisors, including Goldman Sachs, to evaluate several different opportunities, it stated.
The letter revealed that Bed Bath & Beyond had made progress in identifying the company’s next permanent CEO and expects to announce the hire of a chief executive in the coming weeks.
The post has been updated to include Waltzinger’s identification.