Bed Bath & Beyond (BB&B) plans to close 60 stores by the end of fiscal 2019, up from previous estimates that it would be closing about 40 locations. The chain’s namesake Bed, Bath & Beyond division will account for about 40 of the closings, with the remaining 20 coming from its other banners, which include Christmas Tree Shops, World Market, and buybuy Baby.
“Through this fleet optimization project, we have refined our internal processes for evaluating our stores’ performance, which will benefit us going forward, especially as we look to capitalize on our heavy lease expiration cadence, where we have more than 400 leases across all concepts expiring over the next couple of years,” said interim CEO Mary Winston on the retailer's recent earnings call. “We are also evaluating opportunities for sale leaseback transactions, which could generate significant cash for the company.”
Last month Bed, Bath & Beyond laid out plans to turnaround the retailer's struggling business, and started looking at selling off some of its assets.
In a letter to shareholders, Bed, Bath & Beyond interim CEO Mary Winston and independent board chairman Patrick Gaston gave a detailed update on the company’s progress, which included confirmation that the retailer has hired Goldman Sachs and “other outside advisors” to explore asset sales.
The retailer’s second quarter of 2019 showed it’s still having trouble turning things around. Total sales declined 7.3% to $2.7 billion. Comparable store sales fell 6.7%, showing a decrease in the number of transactions in stores, partially offset by an increase in the average transaction amount. Comp sales from customer facing digital channels declined slightly.
“We were slightly down on [the digital] business this quarter and I would say the biggest impact is somewhat self-inflicted,” said Winston. “We’re still suffering the ramifications of decisions that were made earlier where we were focused on profitability at the expense of sales.”
To this end BB&B made changes to the online business such as eliminate some of the SKUs online because of their level of profitability, put a minimum order quantity on some of the online sales, and increase the free shipping threshold. Collectively, these things put pressure on the digital business.
“What we’re trying to do about that is we’re reversing many of those decisions,” said Winston. “Again, our top priority now is to focus on sales, and to manage the cost line through all the other initiatives that we’ve talked about, and so we are reinvesting in our online, we’re investing in improvements in our search and recommendation capabilities on the website. We’re streamlining the checkout process. We’re about to be rolling out our Buy Online, Pickup In-Store (BOPIS).”
Winston, who was appointed Interim CEO in May when Steven Temares stepped down, said the retailer is down to the “final weeks” in its search for a new CEO.
“We’re looking for somebody with retail transformation experience, innovation, online and digital experience, marketing experience,” she noted. “So we’re looking for all of the things that we would need to really continue the transformation of the business and we feel good about where we are in the process.”