Under the leadership of president and CEO Mark Tritton, a number of different initiatives in 2020 powered the company to a fourth-quarter profit, which represented its third consecutive quarter of comparable sales and profit growth.
In a Nutshell: The big-box retailer’s three-year transformation journey that started in 2020 helped get the company to a better position than it was in a year ago, though it still has work to do.
Tritton joined the company, whose nameplates include Bed Bath & Beyond, Buybuy Baby, and Harmon Face Values, in November 2019 as CEO after leaving his chief merchandising officer post at Target. “Fiscal 2020 was a year of fast-paced transformation in which we reformed the past, overcame extraordinary circumstances of the present, and established a firm foundation for the future,” Tritton told Wall Street analysts in a conference call on Wednesday. “Despite the challenges created by the Covid-19 pandemic, we relentlessly focused on taking purposeful and bold steps to transform our entire organization and remained true to our plans to rebuild our authority in Home and restore this iconic company.”
More than 100 digital enhancements, on top of adding ominchannel services like BOPIS and curbside pickup, fueled more than 1 billion website visits, Tritton added, with consumers initiating 3 million app downloads as well.
Online conversion rates rose by 30 percent, driving digital sales growth of over 80 percent for the year, while digital sales surpassed $3 billion. “2020 was a pivotal year for our company,” he said.
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Tritton also noted the company’s improving financial position through diligent cash management and expense control, and said the sale of noncore businesses added cash to the company’s coffers. “Importantly, the company ended the year net cash positive and a much stronger financial position than we started,” he said.
“We have exciting strategic and impactful initiatives for fiscal 2021 that will create a platform for sustainable long-term growth. These include moving beyond transactional private label offering to launching strategic new owned brands that can drive differentiation and preference for our enterprise,” he said.
Bed Bath & Beyond plans to introduce new digital services enhancing its “omni-always” experience and accelerating growth. The company is also planning to remodel its doors as part of a store network optimization program to upgrade the omnichannel shopping experience. It’s also looking at modernizing its technology, which would help reinvent its supply chain to support a digital-first strategy.
Joe Hartsig, chief merchandising officer, said that some of better-performing categories in the quarter were driven by colder weather during the holidays. That translated to strength in “warm and cozy products,” such as comforters, flannel sheets and electric blanket, which became the holiday gift theme of choice for its customers. Home organization products also did well as consumers focused on cleaning out their closets.
Hartsig also spoke about the “excellent start” of Nestwell, Bed Bath & Beyond’s new line of everyday bedding and bath product essentials. “Inspired by the way our customers live, Nestwell features a lineup of nearly 1,200 stylish high quality and solution oriented bedding and bath products all at affordable price points. The Nestwell line includes a variety of sheet beds, pillows, blankets, and comforters, bath towels, and much more. All of our products incorporate high quality modern fabrics and colorations designed to blend well with the customer’s own design aesthetic,” he said.
Coming up later this month will be the introduction of a line of private-label organic cotton products, and in May, the home retailer will launch a core basics private-label brand to attract customers drawn to opening price points across multiple categories.
Net Sales: For the three months ended Feb. 27, net sales fell 16 percent to $2.62 billion from $3.11 billion. The declines were due in part to the impact from planned noncore banner divestitures and permanent store closures. Comparable sales rose 4 percent, representing the third consecutive quarter of increases, led by a strong digital gain of 86 percent. Same-store sales fell 20 percent in the quarter.
The retailer said store net sales fell 27 percent, while digital net sales jumped 86 percent in the quarter.
For the year, net sales declined 17 percent to $9.23 billion from $11.16 billion.
Earnings: The company reported net income of $9.06 million, or 8 cents a diluted share, against a net loss of $65.4 million, or 53 cents, in the year-ago period. On an adjusted basis, diluted earnings per share were 40 cents.
With noncore banner divestitures completed, Bed Bath & Beyond reaffirmed its previous guidance for 2021 net sales to be in the range of $8.0 billion to $8.2 billion. For the first quarter, the company estimated that net sales could increase by over 40 percent, due to the easy comparison from a year ago when the vast majority of doors were temporarily closed because the Covid-19 pandemic. On a continuing operations basis, excluding the impact from divested noncore businesses in both periods, the retailer forecasted first quarter net sales to be up in the range of 65 to 70 percent.
For the year, the retailer narrowed its net loss to $150.8 million, or $1.24 a diluted share, from a net loss of $613.8 million, or $4.94, in the prior year.
CEO’s Take: “We are excited to start fresh in 2021 with our sharpened size and scale, a healthier portfolio of core banners and a stronger financial position to execute the first phase of our three-year transformation journey. As our transformation continues to take hold, we will show up differently for our customers with enhanced omnichannel experiences and modern stores, new communications and differentiated Owned Brands that will elevate the shopping experience and make it even easier to shop with the new Bed Bath & Beyond,” Tritton said.