DISCUSSION

Will ‘five pillars’ provide the foundation Bed Bath & Beyond needs to succeed?

January 9, 2020Written by George Anderson

Photo: Getty Images

It’s been said that the stock market is forward-looking with share prices calculated on how a given company is likely to perform in the future. If that’s the case, then investors seem to think Bed Bath & Beyond (BBBY) is in for more difficult times ahead. The retailer’s share price fell eight percent in extended trading yesterday after it reported third-quarter sales and earnings that came in below Wall Street’s expectations. Same-store sales were down 8.3 percent during the period, below the minus five percent consensus among analysts, CNBC reports. BBBY lost 38 cents per share during the quarter, compared to gain of two cents expected. Mark Tritton, president and CEO of BBBY, called the company’s results “unsatisfactory” and pledged to “move quickly to course-correct and drive the business forward.” On the company’s earnings call with analysts yesterday, Mr. Tritton outlined a preliminary plan to create “a modern, durable model” for the business. The good news, he said, is that consumer research shows that 79 percent of customers have a favorable view of BBBY. The chain faces challenges, however, connecting with Gen-Z and Millennial consumers. “We know in our industry that 80 percent of traffic is influenced by digital touchpoint, reinforcing that our digital business is a gateway to our customer and that we need to drastically improve our digital platform,” said Mr. Tritton. Consumers, he said, have higher expectations “across store, digital and delivery experiences and the reality that the next generation of customers are not just digitally savvy, but shop digital first.” Mr. Tritton outlined “five pillars” – product, price, promise, place and people – he plans to build BBBY’s business upon. Product assortments, he said, will focus on “creating energy through differentiation and curation.” As for price, BBBY will “invest in and clarify compelling value through more choices in opening price points, relevant owned brands and clear price communications,” said Mr. Tritton. BBBY’s “promise” was less well defined. The goal, Mr. Tritton said, was to connect, engage and motivate customers “to strengthen loyalty and lifetime value.” Place for BBBY’s CEO means focusing on omnichannel retailing to serve the “preferred shopping needs” of all its customers. People will be a difference-maker with a focus on creating a “culture that attracts, retains and develops high-performance teams who consistently deliver operational excellence and business results.” Earlier this week, BBBY announced that it has agreed to a sale-leaseback deal with Oak Street Real Estate Capital that will net the retailer $250 million. The deal represents roughly 2.1 million square feet of commercial real estate including stores, a distribution center and office space.

Discussion Thread0