US retailer Bed, Bath & Beyond has lost its turnaround CEO as dire financial results make clear that the signs of life shown by its multi-year omni-channel transformation program a couple of years ago have vanished.
The architect of that program, Target veteran Mark Tritton, has left the company with immediate effect, an announcement which came as the beleaguered retailer turned in Q1 losses of $358 million, down from a loss of $51 million last year, while revenues fell to $1.46 billion from $1.95 billion. Same store sales were down 24% year-on-year, while digital sales fell 21%.
Digital still accounts for 40% of overall revenues. CFO Gustavo Arnal argued:
On the store front, we continue seeing our business as an omni-channel business. So there is complement between the stores and our digital business. We’re happy with our digital business. We have significantly improved our capabilities on digital, and today, [it makes up] 40% of the revenue. So, it has remained important and will continue to be so.
For stores, what we will continue doing, but now even on an accelerated basis is look at the four-wall profitability of our stores, look at the geographic dispersion of them, see where they complement more or less our Buy Online, Pick-up In Store (BOPIS), our supply to customers from the stores. And we will come up with a revised plan on that front. But this is a dynamic process.
Sue Gove, an independent director on the board of Bed, Bath & Beyond, will act as interim CEO until a full-time replacement for Tritton can be found. There’s a big ‘ask list’ for such a candidate, as independent chair Harriet Edelman outlined:
Clearly, we want a focus on merchant skills, modern retailing, digital and omni capabilities, but sharp skills and emphasis on operations execution, cost effectiveness and balance sheet.
For now, Gove outlined some immediate priorities:
Our omni-channel and digital capabilities have grown in services, such as BOPIS and same-day delivery, [which] answer the evolving needs of our customers. We also launched our new loyalty program, Welcome Rewards, last week and we are excited about what we are seeing in these early test days. In the near-term, we have very clear priorities for where we must see improving results. First, we have to make sure we are focusing resources on driving traffic to stores and digital platforms. We also must prioritize how we are serving customers to recapture market share.
Another challenge is clearly the need to drive traffic, both in-store and online. Gove said:
Traffic is a critical area, and so we will continue to tackle that. We’re going to be monitoring the data and results. We also just launched our loyalty program as a test. We’re very excited about the early reads.
We have a lot to do and we must do it quickly.
So said Gove yesterday. Arnal added that the current situation has “takes us to a significantly higher sense of urgency”.
To which the only response, after nearly 3 years of turnaround plan in place (albeit tempered with the disruption of COVID), must be - where the hell has the need for speed and sense of urgency been up till now? For Bed, Bath & Beyond only to be trialing a better loyalty scheme in 2022 says a great deal.
Alongside this ‘higher sense of urgency’ comes a hefty cut in CapEx spending, down from $400 million to $300 million. Arnal says that the necessary omni-channel transformation spend will be protected:
We do think it is important to protect within that $300 million for now the elements related to capabilities, system capabilities, supply chain capabilities, technology capabilities because we’re living in a very challenging and dynamic world, and there is still a need to modernize the company.
Sound sentiment. Let’s hope the practical reality lives up to it. And let’s hope that this new found urgency has the tine to play out.
I’ve used the headline of ‘Bed, Bath & Beyond Hope’ several times in recent years, so I won’t roll it out again. Rather, I’ll point to comments made by Loop Capital Analyst Anthony Chukumba to Yahoo Finance:
We are in the end days. These results were a dumpster fire. There is no other way to put it.