Signage is displayed outside a Bed Bath & Beyond Inc. store in Los Angeles, California, U.S., Monday, September 19, 2016.
Patrick T. Fallon | Bloomberg | Getty Images
Bed bath and beyond said Thursday that it will share its turnaround strategy soon as it burns cash and tries to win back customers ahead of the holiday season.
The home goods retailer will provide an update to investors on Wednesday morning, it said in a press release. Shares rose more than 5% in after-hours trading on Thursday.
Interim CEO Sue Gove said in the statement that the company’s call will include “an overview of the strategies and changes being implemented across the business to deliver results for all stakeholders. “.
She added, “We recognize the strong interest in our business and our plans to better serve customers, regain market share, drive growth and profitability, support our suppliers and strengthen our balance sheet.”
Bed Bath & Beyond is poised to ramp up sales and convince investors it has a way forward. She is looking for a new CEO after her board of directors chased Mark Tritton earlier this summer. It lost market share to competitors as it cut coupons by 20% and introduced unknown private brands. And its shares fell, especially after activist investor Ryan Cohen sold its entire stake in the company last week.
On top of that, the home goods sector is under pressure, going through a period of unusually strong demand at the height of the pandemic. It is also a discretionary category that is more vulnerable as shoppers spend more on food and other necessities due to inflation. These chill sales left many blenders, toaster ovens and coffee makers on discount at big box and specialty stores.
Bed Bath said in June that its first quarter net sales down 25% year over year, resulting in a net loss of $358 million. He did not give a forecast, but said at the time that he expected sales to pick up in the second half of the fiscal year.
The economic backdrop is compounding Bed Bath’s problems, said Neil Saunders, managing director of GlobalData Retail.
“If you ride an escalator down, internally, with the external environment, you ride the escalator down which is super speed,” he said. “It’s a really difficult, if not impossible task, because it’s not the best of environments to try to recreate your business.”
He would seek a lifeline from lenders. According a Wall Street Journal report, the company is set to finalize a $400 million loan to give it cash to pay bills and build credibility with suppliers. The report quotes people familiar with the matter. The company is finalizing negotiations with Sixth Street Partners, which has lent money to other struggling retailers, including JC Penney, the Journal said.
Bed Bath made other changes, as well as the ousting of its CEO. Former head of merchandising Joe Hartsig, one of the architects of his private label strategy, left the company with Tritton. He has a new accounting manager. It launched a new loyalty program and removed at least one of its own brands, Wild sage.
As of Thursday’s close, stocks are down about 31% so far this year. Shares closed Thursday at $10.10, down about 2.5%. The market value of the company is $807.6 million.