Bed Bath & Beyond has revealed its fiscal 2020 capital allocation strategy, including an estimated $1 billion spend balanced across capital return to shareholders, debt reduction, and reinvestment in the company’s core business operations.
The company emphasized that it has a strong cash position, including the expected net proceeds from the sale of PersonalizationMall.com, and the proceeds from a sale-leaseback transaction announced in January as well as anticipated cash from operations.
Bed Bath & Beyond stated that plans call for a fiscal 2020 capital allocation strategy that will include capital return to shareholders, in the form of share repurchases and dividends, and debt reduction of up to approximately $600 million in the aggregate, with a heavier weighting towards share repurchases. The company noted that an existing $2.5 billion share repurchase program has a remaining authorized balance of $1.2 billion. Capital expenditures will come in the range of $350 to $400 million, primarily for investments in stores, information technology and digital projects, and supply chain infrastructure.
In a conference call, Mark Tritton, Bed Bath & Beyond CEO, said that the company anticipates a strong cash position and future financial flexibility. He said the company is working to get better terms from vendors, to operate leaner in terms of inventory and improve product mix. Beyond the PersonalizationMall.com transaction, Tritton said, the company continues to review its portfolio of retail banners. He said that, in stores, based on current tests, the company is putting together a new plan to reduce inventory, increase visibility, create clarity on price and establish a better shopping experience.
Bed Bath & Beyond is working on transformative initiatives as part of its strategic plan for the business, further supported by its capital allocation strategy, the company stated. It expects to deliver further SG&A savings, with mid-to-longer term savings in cost of goods primarily related to the implementation of own-brand strategies, sourcing renegotiations and further optimization of its supply chain.
Tritton stated, “The financial strength of our business allows us to take the important steps needed to return capital to our shareholders and reduce our debt, while at the same time also investing in our customer. This balanced approach to the use of our capital is expected to enhance shareholder value, improve the in-store and online experience and position our company to achieve our long-term objectives to deliver sustainable growth.”