Bed, Bath & Beyond sells off part of the (digital) family silver

A week after depressing Wall Street with its latest dismal financial snapshot, Bed, Bath & Beyond is offloading part of its e-commerce business to raise some much needed cash.

The sale of PersonalizationMall.com to 1-800-Flowers will provide a $252 million boost to Bed, Bath & Beyond’s coffers, a useful sum at a time when it plans CapEx spend for fiscal 2020 of approximately $350 million to $400 million to upgrade IT, digital and supply chain infrastructure. This will include finally implementing Buy Online, Pick Up in Store capabilities.,

PersonalizationMall sells gifts that buyers can customise. It also provides personalization platforms for Bed Bath & Beyond. What 1-800-Flowers gets from the deal:

• A newly renovated 360,000 square foot state-of-the-art production and distribution facility.
• A large customer database, consisting of both consumers and corporate accounts.
• A purpose-built, website and mobile platform with significant and growing customer traffic.
• An innovative and motivated product development, sourcing, merchandising and marketing team.

1-800-Flowers CEO Chris McCann said of the deal:

PersonalizationMall’s extensive product offering and industry-leading personalization capabilities will be an excellent addition to our growing family of popular gifting brands. It will help us further our company’s vision to inspire more human expression, connection and celebration while enhancing our position as the leading one-stop destination for all our customers’ celebratory and gifting occasions.

For Bed. Bath & Beyond, recently-appointed CEO Mark Tritton said:

This transaction is another important step towards simplifying our portfolio and deepening our focus on our core Home, Baby and Beauty businesses. By unlocking valuable capital from within our business, we can accelerate the company’s ongoing business transformation and our efforts to re-establish Bed Bath & Beyond’s authority in the home space.

Other than his dramatic ousting of six senior execs in his opening days, it’s the most significant move that Tritton has made to date in his efforts to turnaround Bed, Bath & Beyond. Last week the retailer announced that it failed to get any significant bounce out of the Holidays season. Comparable store sales fell 5.4% in December and January on "store traffic declines combined with inventory management issues, and increased promotional activity and markdown.”

Tritton said at the time:

We are experiencing short-term pain in our efforts to stabilize the business, including the pressures of store traffic trends coupled with our own executional challenges.  However, we did achieve a notable positive shift in sales in our digital channels during this period, with growth of approximately 20%.  I believe we can solidify this growth, while also addressing the broader stabilization of our business.

We are beginning to make bold and broad-based changes to modernize our business and better serve our customers.  Our ability to achieve this and change the trajectory of our current results will take time, as we remaster the fundamentals of merchandising, pricing and promotion, and focus on our digital channels as part of our go-forward strategy." 

My take

It’s a useful sum of money to have in the bank and will support Tritton’s efforts to upgrade the firms’ stores. In a series of interviews, the CEO has been keen to emphasise that the turnaround is going to take time. That’s a sensible setting of expectations, but whether in reality Bed, Bath & Beyond has the time needed to carve a new future remains highly open to question,