Bed Bath & Beyond To Revitalize Stores On Turnaround Efforts

Bed Bath & Beyond Inc. (NASDAQ:BBBY) provided a strategic update on the business transformation efforts. To stabilize and drive top-line growth, the company aims a rapid refresh of around 160 namesake stores before 2019 holiday season. It expects this multi-million-dollar investment in physical developments to be evident to the consumers and positively impact the in-store shopping experience in near term.

Moreover, the company anticipates an aggressive inventory reduction of up to $1 billion over the next 18 months, with the removal of older surplus inventory from its stores in advance of holiday season 2019. This will help it to reset inventory faster in both stores and distribution centers.

Further, Bed Bath & Beyond plans to shut underperforming stores or relocate stores over the next couple of years to yield benefit of heavy lease expiration cadence. This move will increase the company’s sales and profitability, on a per-store basis. Moreover, its cost savings, reduction of corporate workforce and other short-term actions are projected to reduce cost by $10 million, which will improve margins.

These updates clearly indicate that the company is on track with its transformation plan, positioning it well for success in a dynamic retail landscape. In first-quarter fiscal 2019, management set four major near-term priorities – stabilize and boost top-line growth; reset the cost structure; review and optimize its asset base with its portfolio of retail banners as well as refine the organization structure for the execution of the transformation plan.

Additionally, the company continues to target reaching mid and long-term revenue growth, near-term gross margin expansion, near-term SG&A improvements and sustainable outstanding operational support. It expects to boost revenue growth by focusing on portfolio strategy alignment, including product assortment, customer engagement, learnings from Next Generation Lab stores and expanded online experience.

Bed Bath & Beyond is in the process of strategically expanding its store count apart from increasing productivity of existing stores by adjusting the breadth and depth of its merchandise offerings to suit customer preferences. In first-quarter fiscal 2019, the company opened three stores and remodeled more than 40 existing outlets. Majority of the remodeled outlets were the Next Generation Lab stores. In the long run, it expects to operate more than 1,300 Bed Bath & Beyond stores across the United States and Canada, and also plans to expand other concepts from coast to coast. Moreover, the company remains focused on expanding, renovating and relocating stores to adapt to the changing market conditions.

We hope that the company’s strategic efforts have the potential to bring it back on growth trajectory. Notably, this Zacks Rank #3 (Hold) stock has slumped 26.5% in the past three months, underperforming the industry’s decline of 23.2%.

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