Bed Bath & Beyond is closing its own brand as it tries to reverse declining sales

0
109

A person enters a Bed Bath & Beyond store in New York City’s Tribeca neighborhood on October 1, 2021.

Michael M. Santiago | Getty Images

Bed Bath & Beyond is phasing out one of its private labels, Wild Sage, about a year after the company made an aggressive move into exclusive brands, at the time touted as a pivot of its turnaround strategy.

A spokeswoman for the household goods retailer confirmed that the brand is being discontinued.

The move is likely just the beginning of bigger changes for Bed Bath and its merchandising approach as it seeks to reverse declining sales, appease activist investors and win back shoppers. The retailer has run into problems with its inventory and supply chain, initially missing out on hundreds of millions of dollars in sales due to out-of-stock items and, more recently, a plethora of unwanted products lingering in warehouses and store shelves.

Bed Bath is also looking for a new leader after the board announced in late June that CEO Mark Tritton and chief merchandising officer Joe Hartsig had left the company. The chief accounting officer also left in June.

In a company statement, Bed Bath and Beyond said private labels — which it calls “own brands” — “have a place in our range.”

“Customer response has been positive and we are very pleased with the strength of several of our own brands, such as Simply Essential, offering opening prices,” the company said. “At the same time, we recognize that our customers want a better balance between own and national brands, and are making the necessary changes to the range to improve the customer experience and drive sales and traffic.”

See also  Annual inflation in Pakistan rises to 14-year high at 24.9% in July

Bed Bath said it will provide more updates to its strategy this month. The spokeswoman did not say whether the company is considering phasing out other private labels.

Private labels became a central part of Tritton’s vision and a dominant part of Bed Bath’s stores. Tritton, a Target veteran, joined Bed Bath in 2019 and rolled out a playbook similar to that of the low-cost, upscale retailer. He oversaw the cleanup of stores and the introduction of bedding, kitchen supplies, and more that couldn’t be found anywhere else.

Bed Bath launched nine private labels in the spring of 2021. One was Wild Sage, a brand the company described as “stylish, eclectic, free-spirited bedding, decor, furnishings, bath products, and table linens made for young adults (and the young at heart).” The first collection was launched in June 2021, just in time for the back-to-college season.

Still, some shoppers found the new brand names disorienting — and less appealing. Instead of seeing large displays of major national brands, they saw displays of bedding, furniture and crockery under a name they didn’t recognize.

Same-store sales fell 27% for the Bed Bath & Beyond brand in its most recent quarter, which ended May 28.

See also  Blow to South Africa's consumer finances as tariff hikes and cost of living hit

Rapid change, estranged customers

Following the company’s most recent earnings report in late June, interim CEO and board member Sue Gove said the company’s sales results “didn’t meet our expectations.”

Jason Haas, a retail analyst for Bank of America Securities, said the retailer alienated its customers by acting too quickly. It has also phased out its popular 20% coupons, a move it has since reversed.

“If they rolled out and layered those brands at a more measured pace, [with national brands] and had the customer become a little more familiar with seeing them on the shelf, it would have been more successful,” he said.

In addition, he said, Bed Bath led to an exacerbation of pandemic problems in the supply chain. Nearly every retailer has faced congested ports and truck shortages, but private label items tend to have longer lead times because they are manufactured and shipped from abroad. National brands tend to have goods that can get to stores faster from U.S. warehouses, Haas said.

There are signs of the end of Wild Sage on Bed Bath’s website. The merchandise is available at deep discounts, including a tie-dye robe for $7, discounted from its original price of $35, and a 16-piece terracotta dinnerware set for $16, less than the original $80. Many other Wild Sage items items are out of stock after being listed for as much as 90% off.

See also  Train Strike Dates: Full List of Train and Metro Disruptions for August

However, as Bed Bath turns to more national brands, it may run into a different kind of problem. Sellers may be reluctant to work with the retailer or ask for upfront payments as the company’s coffers are drying up quickly.

Bed Bath reported about $108 million in cash and equivalents as of May 28, down from $1.1 billion a year earlier. Net losses totaled $358 million, up from a loss of $51 million in the same period in 2021.

For now, the company can still call on JPMorgan Chase’s existing $1 billion revolving credit facility, according to a quarterly filing with the Securities and Exchange Commission.

On May 28, Bed Bath said it had $200 million in loans outstanding under the loan.

Still, analysts believe the household goods retailer will need more cash to weather the turnaround.

Gustavo Arnal, Bed Bath’s chief financial officer, said in a conference call in June that the company still had “sufficient liquidity” with its credit facility and that it had engaged Berkeley Research Group consultants and financial advisors to seek additional capital.

“There are avenues we are exploring to further increase our liquidity and navigate the working capital cycle, especially over the next two quarters, given the seasonality of our business,” he said during the call.

.

LEAVE A REPLY

Please enter your comment!
Please enter your name here