Bed Bath & Beyond Updates Shareholders on Strategic Plan; Nears CEO Hire
"Furthermore, we expect to be able to take advantage of our 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-store basis,” the shareholder letter states.
UNION, NJ—The current leadership of national retailer Bed Bath & Beyond provided an update earlier this week to its shareholders on its sweeping business transformation efforts that include a multi-million-dollar capital improvement program to its stores, a comprehensive lease renewal effort and the nearing of the end of its search for a new CEO.
Patrick R. Gaston, chairman of the board of directors and Mary A. Winston, interim CEO of Union, NJ-based Bed Bath & Beyond, detailed the latest in the company’s efforts to drive efficiencies and stabilization to the company’s operations in a letter to shareholders on Wednesday.
The letter states that the retailer has undertaken what it terms is a “rapid refresh” of nearly 160 Bed Bath & Beyond stores that. is expected to be finished in advance of the 2019 holiday season. “We expect this multi-million-dollar investment in physical improvements to be clearly visible to the customer and favorably impact the in-store shopping experience over the short term,” they stated.
A longer-term comprehensive store renovation program, in conjunction with further investments in our customer-facing digital channels as well as marketing and loyalty initiatives, is also planned.
The company is also seeking cost savings from a comprehensive lease renewal efforts and the corporate workforce reduction announced in late July 2019, and certain other near-term actions that are expected to collectively take tens of millions of dollars out of the cost base of its business, increasing margins while also creating a more effective organization to meet the needs of our customers today and in the future.
In July, Bed Bath & Beyond announced it initiated a reduction in corporate staff at its headquarters in Union, NJ and at other select locations where corporate associates are based. As part of this realignment, Eugene A. Castagna, president and COO of the company, departed and the role has been eliminated.
The company stated in July it had recently completed a comprehensive and careful review of its corporate office cost structure, which resulted in a reduction of approximately 7% of its corporate staff, including vice presidents, directors, managers and professional staff.
Other initiatives outlined in the shareholders letter released earlier this week included a longer-term plan to substantially change its sourcing and buying approach to increase the penetration of its private-label offerings that should yield significant cost savings over the next two-to-three years and provide further product differentiation and a more favorable margin structure.
The retailer also has embarked on what it terms is an aggressive reduction of up to $1 billion of inventory that is expected to be executed over the next 18 months, including the removal of excess aged inventory from its stores anticipated before the 2019 holiday season.
“Also, we continue to evaluate our fleet to create a better balance between our physical and digital presence within the markets we serve, to deliver the shopping experience our customers want. Furthermore, we expect to be able to take advantage of our 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-store basis,” the shareholder letter states.
In terms of changes to its governance, nine new independent directors have been appointed over the past few months, significantly reducing the average tenure of its Board.
Gaston and Winston, who was appointed interim CEO in May, stated that the company’s CEO Search Committee “has undertaken a robust process to identify a leader who has a multifaceted skill set, including transformation and innovation experience in the retail sector as well as e-commerce and marketing experience. The caliber of candidates is outstanding, and we expect to be able to announce the hire of a world-class CEO in the coming weeks who will lead the company and continue the transformation already underway.”