When we last checked in on Bed, Bath & Beyond’s omni-channel transformation progress, it wasn’t a pretty picture, with increasingly impatient activist investors circling the firm and complaining about lack of progress and “detached from reality” management.
At the time, CEO Steven Temares was trying to pitch a long game message and convince the world that the transformation program had delivered “significant foundational change” across the business. Our assessment was stark:
It’s not a pretty picture at this point for Bed, Bath & Beyond’s omni-channel future - at least not under the current regime.
Flash forward and the outlook hasn’t changed, but the regime has. Temares is gone and while a full-time successor is found, interim CEO Mary Winston is left to sell the idea that there’s change underway and this time around it will work, honest it will!
It needs to. The retailer just turned in another set of awful quarterly numbers - a profit of $43.6 million a year ago turned into a net loss of $371.1 million, while revenues fell by 6.6% year-on-year to $2.57 billion.
Enjoying the grace period afforded to any incoming CEO to critique the business without having to be held responsible, she admits:
There needs to be a fundamental change in our approach to executing the company's business transformation. A key challenge for the business in the past has been that there have been too many initiatives underway which has resulted in a lack of strategic focus and less meaningful results.
That’s commendably candid and also frankly a statement of what has been pretty obvious for a long time. But the road to recovery begins with the admission that there’s a problem to be addressed, so let’s give that a pass. The question now then is - what next?
What does that mean?
The answer it seems lies with a new Business Transformation and Strategy Committee. When in doubt, set up a strategy committee! This one is going to:
review and evaluate the ongoing business transformation and will make recommendations on how the company can best capitalize on and navigate the evolving retail environment to accelerate the company's evolution.
And if that’s not enough mission statement waffle for you, try this:
Together, the Board and the management team are challenging our current value proposition and operating model to take on a more holistic approach to the transformation while also maintaining a focus on delighting our customers and delivering long term value to shareholders.
I can’t see that word salad calming angry activists at the shareholder meeting on 25 July, even if it’s served up in a lovely salad bowl from Bed, Bath & Beyond’s extensive range.
And Winston was noticeably short on specifics, even around existing omni-channel transformation programs. Over the last quarter, half of the $68 CapEx costs went on technology projects around digital capabilities, analytics and logistics. Nothing was said on the post-results analyst call to advance any understanding of what’s been achieved.
Instead the interim CEO fell back on the mile-high, ‘on the one hand, on the other hand’ blandishments:
We need to give our customers a reason to keep shopping in our brick-and-mortar stores and in order to do that we must update and enhance store experience. This will continue to be a priority for us. Beyond enhancing our store experience, we must also transform the online shopping experience to engage our customers digitally. Both our store and digital experiences will continue to be areas of focus for us.
It's still early and there is much work to do to fully assess the business.
Well, yes, it’s certainly the case that Winston is new to the CEO chair and that’s not a comfortable seat to be in right now, even if it’s one of Bed, Bath & Beyond’s extensive range of seating. But that’s where she finds herself and with two weeks to come up with a better tale to tell to shareholders at the annual meeting.
The Business Transformation and Strategy Committee won’t have come to any significant conclusions by then, but the company needs to get out in front of the challenge of presenting some benefits of that CapEx investment so far. If it can’t illustrate some omni-channel progress, then all the word salad in the world isn’t going to help, no matter how nice the bowl it's served up in.