Summary
- Bed Bath & Beyond recently assembled a strong executive team in order to carry out the task of turning around its business.
- In Q2 2020, nearly 40% of all online orders were placed by customers new to the Bed Bath & Beyond web portal. Its physical stores can actually be an asset.
- Execution risks remains high, and the question also looms of is it "too little, too late".
The retail industry has been going through a bit of an upheaval in the past few years with this trend accelerated by the coronavirus pandemic. However, there is an opportunity for companies to thrive in this type of environment, provided they have the right approach and strategy. One such company that is looking to turn its fortunes around is Bed Bath & Beyond (BBBY). I wanted to examine the company's plans to see if the company is worth investing in.
Just a brief background on the company, Bed Bath & Beyond is a retailer of home furnishings, bath fixtures, and other domestic merchandise. Traditionally, the company sold its products on its namesake big-box stores. However, the company has suffered declining sales in recent years as one of the victims of the so-called “retail apocalypse”. Bed Bath & Beyond’s difficulties in recent years have come from a myriad of factors such as mismanagement of inventory, outdated store concepts, directionless brand positioning among many others. In late 2019, the company brought in Mark Tritton, a former Target (TGT) executive, as CEO in an effort to change the fortunes of the company. The company recently assembled a strong executive team in order to carry out the task of this turnaround.
Right of the gate, the company’s turnaround plans have hit a snag due to the coronavirus pandemic. However, ultimately, this may turn out to be a blessing in disguise for the beleaguered retailer. In terms of Q1 2020 results (ended May 2020), like most brick and mortar retailers, results suffered due to the coronavirus pandemic and subsequent lockdown orders. Net Sales decreased by 49% due to temporary store closures. A silver lining in these results though is that Net Sales from digital channels grew by 82%. In fact, the company disclosed for the quarter sales from digital channels represented two-thirds of the $1.3 billion in total sales. In even more good news for the firm, nearly 40% of all online orders were placed by customers new to the Bed Bath & Beyond web portal with 10% of online sales from customers new to Bed Bath & Beyond.
