As part of an Investors Day when it will be detailing strategic growth plans, Bed Bath & Beyond declared that it is communicating a clear customer value proposition to deepen connections with core customer segments while outlining the financial path the company is planning for the next three years.
The company expects to maintain stable comparable store sales in 2021 versus strong comps in 2020, and then in 2023 post low to mid single digit comps. The company anticipates earning more than $500 million in EBITDA in fiscal 2021 and $850 million to $1 billion in 2023, with cumulative capital investment of $1 billion to $1.5 billion across the three years.
In terms of merchandising, Bed Bath & Beyond stated that curating a differentiated product assortment to build market share is a priority. By completely resetting its assortment, the company asserted, it will provide a more curated, inspirational and differentiated product collection across categories. Private label also plays in as well. Over the next 18 months, Bed Bath & Beyond expects to launch more than 10 new owned brands in key destination categories with the intent of tripling proprietary label penetration within its assortment over three years.
The retailer also wants to create opportunities for market share growth by increasing the availability of opening price points and value-tier products, but also enhancing the customer experience in destination rooms that will provide ease in shopping and inspiration in-store and online. The company will continue to improve base price competitiveness across key categories while also addressing assortment gaps in value tiers, to help it compete better with mass retailers and attract new customers to the business. The company will employ data and insights to build discipline into promotions and increase return on investment and remove ineffective promotional activity. And it intends to boost the communication of value across channels, including more compelling value at first customer glance.
Bed Bath & Beyond is moving away from its former de-centralized inventory management approach to create an omni-always, centralized ordering and replenishment system to ensure higher in-stock levels, increased sales and provide long-term productivity improvements. As such, it will create a more inspirational, omni-always digital and in-store shopping experience, building on the recent launch of buy-online-pickup-in-store, curbside pickup and same day delivery services that have prompted more than two million customers to shop more than one channel this year, the company indicated. Bed Bath & Beyond will elevate the customer experience to drive conversion, unlocking omni-always services that can inspire more customers to shop across channels. The intention is to transition operations and establish a digital-first culture that will capture new customers.
To make shopping easy and inspiring, as part of an overall store optimization program, Bed Bath & Beyond will invest significantly in its store fleet facilitating a $250 million remodel plan over the next three years that will cover 450 stores that represent about 60% of revenue. As part of the company’s strategy to build authority in the kids market, the company expects to grow the buybuyBaby physical footprint with additional stores in new markets and increase sales by 50% to $1.5 billion by fiscal 2023.
Bed Bath & Beyond will improve its operational proficiencies to establish a more agile, customer-centric approach to the market. The company expects an end-to-end modernization of its supply chain and technology capabilities— each initiative coming with a $250 million price tag— to deliver significant operational efficiencies. Bed Bath & Beyond expects to invest approximately $250 million over the next three years to reinvent its supply chain, and pivot from a consolidation-based model to a modernized distribution network that is faster, more competitive and responsive to the market.
In addition, Bed Bath & Beyond maintained that it is on track to deliver approximately $200 to $250 million in sourcing benefits over the next three years by reducing the number of suppliers used and successfully negotiating with remaining vendors.
Mark Tritton, Bed Bath & Beyond president and CEO, said, “We have made tremendous progress this year to strengthen our financial position, focus our portfolio in core home, baby, beauty & wellness markets, rebuild our executive team, and launch a series of omnichannel services to win back customers. We will build on these strong foundations with a three-year growth strategy that further elevates the shopping experience, modernizes our operations, and unlocks sales growth, margin expansion, increased cash flow and strong and sustainable total shareholder return. Our transformation is rooted in an omni-always, customer-inspired approach that will make it easy to feel at home with Bed Bath & Beyond. In doing so, we will deepen our relevance and connection with customers by helping them unlock the magic in every room.”