Director Sue Gove named interim chief as company works to roll back chain’s push into private-label brands; shares tumble.
By Suzanne Kapner and Dean Seal from the Wall Street Journal.
When Mark Tritton took the helm of Bed Bath & Beyond Inc. BBBY -5.23%▼ in 2019, he moved quickly to overhaul the home-goods chain by cleaning up crowded aisles, scaling back coupons and doing away with popular national brands in favor of new, private-label goods.
That strategy was repudiated on Wednesday, after the company reported another quarter of plunging sales that pushed its stock down further. The board replaced Mr. Tritton with Sue Gove, an independent director who is stepping in as interim chief executive officer while it searches for his successor, the company said.
The news came as Bed Bath & Beyond reported that sales for the three months to May 28 plunged by a quarter compared with the same period last year, while its net loss widened to USD 358 million from USD 51 million.
Bed Bath & Beyond’s shares, down more than 55 % this year and nearly 80 % over the last 12 months, shed another 24 % Wednesday.
Related Video
Where in Americans’ household budgets is inflation hitting the hardest? WSJ’s Jon Hilsenrath traces the roots of the rising prices to learn why some sectors have risen so much more than others. Photo Illustration: Laura Kammermann/WSJ
The CEO change comes after Bed Bath & Beyond faced pressure from activist investor Ryan Cohen, the billionaire founder of the pet retailer Chewy Inc., to improve performance and explore strategic alternatives for its Buybuy Baby chain.
Under an agreement with Mr. Cohen, Bed Bath & Beyond added three directors to the board in March, with two overseeing a committee to review plans for Buybuy Baby. Bed Bath & Beyond has fielded interest from potential acquirers of Buybuy Baby, including private-equity firm Cerberus Capital Management LP, The Wall Street Journal has reported.
On Wednesday, the company said that it is continuing to evaluate plans for the baby-product retailer.
Ms. Gove, a board member since 2019, is a former CEO of Golfsmith International Holdings and operating chief at Zale Corp. Bed Bath & Beyond also said Mara Sirhal will replace Joe Hartsig as chief merchant. Ms. Sirhal was most recently general manager of the company’s Harmon chain.
Ms. Gove told analysts on Wednesday that she has been a longtime Bed Bath & Beyond shopper and spent the past weekend in its stores working through the college checklist with her daughter. As head of the board’s strategy committee, she has played an instrumental role in plotting a new direction for the company, which includes rolling back some of Mr. Tritton’s efforts, particularly in private brands.
“Bed Bath & Beyond’s transformation strategy has not worked,” Neil Saunders, managing director of research firm GlobalData, wrote in a note to clients. “Mark Tritton entered the business and ripped up its playbook. But the strategy he replaced it with was not tested and nowhere near sharp enough to compensate for the loss of traditional customers.”
tor Sue Gove named interim chief as company works to roll back chain’s push into private-label brands; shares tumble
Outgoing CEO Mark Tritton made a big bet on private-label brands at Bed Bath & Beyond that didn’t pay off.Photo: Gary Gershoff/Getty Images
By Suzanne Kapner and Dean Seal from the Wall Street Journal.
When Mark Tritton took the helm of Bed Bath & Beyond Inc. in 2019, he moved quickly to overhaul the home-goods chain by cleaning up crowded aisles, scaling back coupons and doing away with popular national brands in favour of new, private-label goods.
That strategy was repudiated on Wednesday, after the company reported another quarter of plunging sales that pushed its stock down further. The board replaced Mr. Tritton with Sue Gove, an independent director who is stepping in as interim chief executive officer while it searches for his successor, the company said.
The news came as Bed Bath & Beyond reported that sales for the three months to May 28 plunged by a quarter compared with the same period last year, while its net loss widened to USD 358 million from USD 51 million.
Bed Bath & Beyond’s shares, down more than 55 % this year and nearly 80 % over the last 12 months, shed another 24 % Wednesday, June 29, 2022.
Where in Americans’ household budgets is inflation hitting the hardest? WSJ’s Jon Hilsenrath traces the roots of the rising prices to learn why some sectors have risen so much more than others. Photo Illustration: Laura Kammermann/WSJ
The CEO change comes after Bed Bath & Beyond faced pressure from activist investor Ryan Cohen, the billionaire founder of the pet retailer Chewy Inc., to improve performance and explore strategic alternatives for its Buybuy Baby chain.
Under an agreement with Mr. Cohen, Bed Bath & Beyond added three directors to the board in March, with two overseeing a committee to review plans for Buybuy Baby. Bed Bath & Beyond has fielded interest from potential acquirers of Buybuy Baby, including private-equity firm Cerberus Capital Management LP, The Wall Street Journal has reported.
On Wednesday, the company said that it is continuing to evaluate plans for the baby-product retailer.
Ms. Gove, a board member since 2019, is a former CEO of Golfsmith International Holdings and operating chief at Zale Corp. Bed Bath & Beyond also said Mara Sirhal will replace Joe Hartsig as chief merchant. Ms. Sirhal was most recently general manager of the company’s Harmon chain.
Ms. Gove told analysts on Wednesday that she has been a longtime Bed Bath & Beyond shopper and spent the past weekend in its stores working through the college checklist with her daughter. As head of the board’s strategy committee, she has played an instrumental role in plotting a new direction for the company, which includes rolling back some of Mr. Tritton’s efforts, particularly in private brands.
“Bed Bath & Beyond’s transformation strategy has not worked,” Neil Saunders, managing director of research firm GlobalData, wrote in a note to clients. “Mark Tritton entered the business and ripped up its playbook. But the strategy he replaced it with was not tested and nowhere near sharp enough to compensate for the loss of traditional customers.”
tor Sue Gove named interim chief as company works to roll back chain’s push into private-label brands; shares tumble
Outgoing CEO Mark Tritton made a big bet on private-label brands at Bed Bath & Beyond that didn’t pay off.
Mr. Tritton, who joined Bed Bath & Beyond as CEO in 2019 from Target Corp., oversaw the company’s early pandemic efforts to improve the shopping experience by reducing stores’ product counts and offering new, private-label brands.
The changes left Bed Bath & Beyond vulnerable to the supply-chain disruptions that have been roiling the retail industry, according to former employees, industry executives and analysts.
Bed Bath & Beyond executives said on Wednesday that the push into private-label brands went too far. “The customer wants to see more of an optimal balance of national brands, direct-to-consumer brands and company-owned brands,” Ms. Gove said. “So we’re focused on improving the category mix.”
Marsha Weidman of Los Angeles said Bed Bath & Beyond was her favorite store until it swapped name brands for private-label merchandise. “The store is filled with private-label brands with no designs, colors or quality,” the 72-year-old said.
Private-label brands tend to require longer lead times than stocking goods from national brands, because retailers need to develop the designs and contract with factories. Those longer lead times led to an inventory overload in private brands, particularly in bed, bath and kitchen items, executives said.
“There was a mismatch between when the demand was estimated, when the supply actually happened, compounded by the supply-chain challenges in the industry,” said Gustavo Arnal, Bed Bath & Beyond’s finance chief. “And now with softer demand.”
Mr. Arnal said sales of bed, bath and kitchen items declined by double-digit percentages in March, April and May. He added that those categories account for half of the company’s sales.
Ms. Gove told analysts on Wednesday that she has been a longtime Bed Bath & Beyond shopper and spent the past weekend in its stores working through the college checklist with her daughter. As head of the board’s strategy committee, she has played an instrumental role in plotting a new direction for the company, which includes rolling back some of Mr. Tritton’s efforts, particularly in private brands.
“Bed Bath & Beyond’s transformation strategy has not worked,” Neil Saunders, managing director of research firm GlobalData, wrote in a note to clients. “Mark Tritton entered the business and ripped up its playbook. But the strategy he replaced it with was not tested and nowhere near sharp enough to compensate for the loss of traditional customers.”
Like other retailers, Bed Bath & Beyond has been dealing with supply-chain backlogs, including factory bottlenecks as well and shipping and port delays. The chain ran short of its 200 bestselling items during the most recent holiday season, leading to $100 million in lost sales, and posted another sales shortfall the following quarter.
Mr. Arnal said that during the most recent quarter, the arrival of delayed goods was met with sharply lower consumer demand, a problem that other large chains are experiencing.
On Wednesday, the company said sales in its first fiscal quarter had dropped 25% to $1.46 billion, while its quarterly net loss swelled sevenfold compared with last year to $358 million. Inventory was up 12.5% compared with a year ago, prompting the company to step up markdowns to clear out the excess goods.
Ms. Gove said customer sentiment shifted during the quarter as steep inflation and fluctuating purchasing patterns ate into Bed Bath & Beyond’s sales and inventory.
Bed Bath & Beyond’s problems go beyond those macroeconomic issues now roiling many companies. Mr. Tritton inherited a company with antiquated systems and analysts said he didn’t do enough to upgrade them.
The company said on Wednesday that its next CEO needs to be a merchant but to also have strong operational skills.
“Our performance today requires an adjustment to strategy and a deep focus on basic operational execution,” Harriet Edelman, the company’s chairman, told analysts.