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Bed Bath & Beyond (BBBY) Q1 2022 earnings

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A pedestrian walks by a Bed Bath and Beyond store in San Francisco, California.

Justin Sullivan | Getty Images

Bed Bath & Beyond is replacing CEO Mark Tritton in a leadership shakeup after the retailer struggled through one other quarter of declining sales and posted a steeper loss.

The corporate said Wednesday that Sue Gove, an independent director on the board, will step in as interim CEO. The change comes after a multi-year push to revive Bed Bath’s brand, grow online sales and win back customers. Tritton, a Goal veteran, had led the hassle after joining in 2019.

Shares closed down 24% Wednesday.

Together with company challenges, Bed Bath & Beyond is facing a tougher economic backdrop.

“I step into this role keenly aware of the macro-economic environment,” Gove said in a press release, citing steep inflation and shifting buying habits.

Still, Gove said the corporate needs to enhance its performance and that its first quarter results are “lower than our expectations.” Along with working to repair supply chain problems, reduce costs and improve its balance sheet, Gove said Bed Bath & Beyond will embrace a “back to basics mantra” to win back customers.

Bed Bath & Beyond said it expects same-store sales to get well within the second half of the fiscal 12 months, but didn’t provide a selected forecast.

The retailer also named a latest chief merchandising officer. Mara Sirhal, who most recently served as general merchandise manager of health, beauty and consumables, will replace Joe Hartsig, who’s leaving the corporate.

Here’s how the retailer did within the three-month period ended May 28 compared with what analysts were anticipating, based on Refinitiv data:

  • Loss per share: $2.83 vs. $1.39 expected
  • Revenue: $1.46 billion vs. $1.51 billion expected

The corporate’s net loss widened to $358 million, or $4.49 per share, from $51 million, or 48 cents per share, a 12 months earlier. On an adjusted basis, the corporate’s net loss was $2.83 per share. That was greater than the $1.39 that analysts expected, based on Refinitiv.

Sales fell to $1.46 billion from $1.95 billion a 12 months earlier. Wall Street expected sales of $1.51 billion.

Same-store sales, a key retail metric, declined 24% within the quarter compared with a 12 months ago, worse than the 20.1% drop that analysts expected, based on StreetAccount. Online sales fell by 21% 12 months over 12 months. The figures include a 27% drop for its Bed Bath & Beyond banner and a mid single-digits decline for the Buybuy Baby banner.

A leadership shakeup

The leadership shakeup comes after a greater than two-year effort to revive the corporate’s brand, grow its online business and win back customers who’ve fled to other places to purchase towels, fill up on dorm supplies and register for weddings.

Under Tritton, a Goal veteran, the corporate launched quite a few private label brands, shuttered underperforming locations and remodeled stores. Despite the efforts, Bed Bath struggled to reverse trends and bumped into latest obstacles. In the course of the holiday quarter, for instance, the corporate missed out on about $175 million in sales due to out-of-stocks. Merchandise got stuck at ports and there have been shortages of things like vacuums due to lack of microchips.

In essentially the most recent quarter, against this, Bed Bath racked up excess inventory as demand fell, Chief Financial Officer Gustavo Arnal said. Inventory rose about 15% from a 12 months ago, he said.

He told analysts the corporate will move quickly to clear excess inventory, an issue other retailers including Goal face.

Bed Bath will reduce full-year capital expenditures by at the very least $100 million to about $300 million, too, Arnal said.

Activist pressure

Bed Bath has been under pressure from activist investor Ryan Cohen, chairman of GameStop and co-founder of Chewy. Early this 12 months, Cohen’s firm, RC Ventures, revealed a ten% stake in the corporate. Cohen called for sweeping changes, criticized top executives’ high pay and urged the sale or spinoff of the corporate’s baby gear chain, Buybuy Baby.

Bed Bath and Cohen got here to a truce in late March. The retailer agreed so as to add latest independent directors to its board and look into alternatives for the Buybuy Baby chain. However the challenges for the house goods retailer haven’t let up.

Shares of the corporate are down 55% to this point this 12 months and hit a fresh 52-week low earlier this month. On Tuesday, shares of the corporate closed at $6.53, down greater than 3%.

Bed Bath on Wednesday said a board committee is looking into ways to maximise the worth of its baby chain, including by boosting its registry program and by improving its website and app. Gove didn’t rule out a possible sale of the business.

“The business is a really attractive business and we’re not alone in appreciating its value. We all know there may be interest,” she said on the decision with analysts.

Bed Bath & Beyond said it hired retail advisory firm Berkeley Research Group to have a look at its inventory and balance sheet. It has also hired national search firm, Russell Reynolds, to search for a everlasting CEO.

Read the corporate’s earnings release here.

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