Bed Bath & Beyond Keeps Focus On Omnichannel Strategy

Although Bed Bath & Beyond has suffered some criticism for softening financial performance in a period when it has been investing to bolster omnichannel capabilities, the retailer’s executives at the company’s annual meeting insisted that their strategy is on track and advancing.

Indeed, company co-chairman and co-founder Leonard Feinstein told meeting attendees that Bed Bath & Beyond’s financial performance was solid and in-line with expectations, adding that the “significant investment in our business,” designed largely to boost online-related operations, had contributed substantially to the company’s results. He and other executives said a strong balance sheet, which enables self investment, and retail-leading margins demonstrated that the company remains healthy as it expands the ways it can engage consumers.

The recent purchase of online retailer One Kings Lane will expand Bed Bath & Beyond’s ability to reach consumers and act as a “cornerstone of growth” in furniture across its multi-banner business, said Steven Temares, Bed Bath & Beyond CEO. He added, however, that One Kings Lane is a “prestige brand” that Bed Bad & Beyond would protect as an entity even as it learns from and integrates the operation.

As for stores, the company continues to innovate and evolve in line with what it is learning about the customer even as it expands integration of online shopping. The integration has furthered operations such as registry, where many consumers take advantage of meeting with a representative at the store to designate products that shoppers frequently purchase online, as well as store return of online purchases, Temares said. He cited two recently opened stores as examples of its ongoing adaptation to a changing market. A new Bed Bath & Beyond in Hyannis, MA, offers fresh presentations and tech-supported interfaces, including a scanning tool that allows shoppers to access online reviews of products in store. Also, a new andThat! store in Kennesaw, GA, the format itself being an update and reconfiguration of the Christmas Tree Shops banner stores that it operates in New England and Middle Atlantic states, incorporates upgraded merchandising to better serve customers.

At the same time, Warren Eisenberg, the retailer’s co-chairman and co-founder, said that a new concept store would now open in September. The new Sunset Park, Brooklyn location unites the four main Bed Bath & Beyond banners— Harmon and buybuy Baby with the namesake and Christmas Tree Shops formats— under a single roof and adds a dedicated interface with its Beyond Store e-commerce operation.

In a sign of some investor dissatisfaction with the company’s recent direction, the company announced that two shareholder proposals opposed by the Bed Bath & Beyond board had been adopted. One regards the addition of a proxy access bylaw requiring the company to enter into board nomination candidates put forward by substantial, long-term shareholders. The other sought shareholder approval of future severance packages that provide senior executives compensation of more than 2.99 times the sum of salary plus bonus.

For the fiscal year ended February 27, Bed Bath & Beyond reported net earnings of $841.5 million, or $5.10 per diluted share, versus $957.5 million, or $5.07 per diluted share, for the fiscal year before. Net sales were $12.1 billion up 1.9% from sales posted in fiscal 2014, while comparable sales gained 1% year over year.

For the fiscal 2016 first quarter ended May 28, Bed Bath & Beyond posted net earnings of $122.6 million, or 80 cents per diluted share, compared with $158.5 million, or 93 cents per diluted share, for the year-earlier period. Net sales in the quarter were approximately flat year over year at $2.74 billion while comps decreased by 0.5%, although customer facing digital sales comps gained more than 20%, according to the company, close to the 25% figure cited in the fourth quarter of fiscal 2015.