Business

Bed Bath & Beyond Commodity Issues Could Paralyze Turnaround Plans


A person leaves a Bed Bath & Beyond store in New York City, June 29, 2022.

Andrew Kelly | Reuters

Outdoor shower bed is betting on a drastic change in strategy and famous brands to revive its struggling business.

But the retailer’s strained relationship with suppliers of products like air fryers and stand mixers – some of which went missing from shelves two holiday seasons ago – could keep stores from falling. have hot items again. Out-of-stock products could cripple Bed Bath’s already declining sales and push the company into bankruptcy.

Bed Bath is fighting to win back customers as it faces a leadership change, a mountain of debt and the aftermath of a stock frenzy fueled by Activist investor Ryan Cohen. On top of that, tensions with suppliers of goods are growing as the company’s problems worsen, according to former executives who recently left the company. They declined to be named because they were not authorized to speak on internal discussions.

Chief Executive Officer Mark Tritton, hired in 2019 to oversee the company’s previous turnaround effort, was ousted by the board this year. Bed Bath’s sales manager was also pushed out. Chief Financial Officer Gustavo Arnal, who was integral to arranging a new loan for Bed Bath, died by suicide earlier this month. The company is currently led by an interim CEO and interim CFO.

In a call with investors in late August, two days before Arnal’s death, company leaders announced the new financials and revealed a new sales strategy rely heavily on national brands to attract more people to the store. Under Tritton, Bed Bath launched and tried to develop nine exclusive brands. Bed Bath now intends to significantly scale back those private labels – including by discontinuing some of them.

Bed Bath has merchandise from the rest of its boutique brands to fill store shelves. It has deals with direct-to-consumer brands, such as mattress maker Casper, and is trying to attract more of them. However, to deliver under its new scheme, Bed Bath must ensure steady shipments from brands that many shoppers recognize.

Bed Bath leaders say the strategic shift has been well received. Interim CEO Sue Gove said in August that she even received thanks from suppliers.

“As previously shared, we are committed to delivering what our customers want, driving growth and profitability, and strengthening our financial position. We recognize the vital importance of Our supply partners and team are working continuously with them where support is enthusiastic and high, especially with our largest partners,” a company spokesperson said in a statement. An announcement.

“They want us to win, by supporting the previously announced taxonomy changes to create the best experience for our shared customers.” Bed Bath plans to update supplier relationships and strategies when it reports fiscal second-quarter earnings next week, she added.

Over the past two years, however, Bed Bath has experimented with supplier relationships with late payments, pushing for private labels and losing buyers. Those tensions are growing as financial troubles mount, according to former Bed Bath executives.

Make or break

A customer carries a shopping bag outside a Bed Bath & Beyond Inc. store. in Charlotte, North Carolina.

Logan Cyrus | Bloomberg | beautiful pictures

Supplier relationships can make or break a retailer. Usually, suppliers ship the goods and get a refund a few weeks or months later. However, the terms can change if the retailer shows signs of financial difficulty – sometimes prompting suppliers to shorten payment deadlines, demand cash on delivery, or suspend deliveries.

Bed Bath has agreed to tougher payment terms and upfront payments to some suppliers, the company said in a public filing. Company leaders admitted on a call with investors that they are managing supplier relationships on a weekly basis.

Tensions with suppliers are often the main reason retailers push through restructuring. The debt-ridden company Toys “R” Us filed for bankruptcy in September 2017 and was subsequently liquidated, shortly after its suppliers demanded cash on pre-delivery deliveries. holiday. Other retailers, such as appliance chain HH Gregg and electronics store RadioShack, suffered a similar fate as they struggled to keep shelves stocked and sold out due to broken payment terms. tightening of suppliers.

An active element The advantage of Bed Bath is that it works with a large number of suppliers and, if necessary, can replace a supplier that will not ship to the retailer. Retailers such as Toys “R” Us, as well as sportswear chain Sports Authority – which liquidated as part of a bankruptcy filing in 2016 – rely heavily on very few suppliers to get their money. products on their shelves.

Bed Bath had a significant amount of debt before the new financing. The retailer has a total of nearly $1.2 billion in unsecured bonds – with maturities spanning 2024, 2034 and 2044 – all of which are trading below par, a sign indicate their financial predicament. In recent quarters, the company said it burned a significant amount of cash. Even so, it continues with an aggressive share buyback plan that amounts to over $1 billion in buybacks.

The funding announced in August is expected to give Bed Bath some breathing room and buy it some favors from suppliers. But even before the company needed a loan, it lost ground with some of its suppliers, according to former executives. Bed Bath has had trouble with big-name suppliers over payment terms and executives have become frustrated with smaller shipments of popular products, while seeing retailers Others have more of those items – and sometimes exclusive versions.

During the 2020 holidays, Bed Bath stores have reduced prices on air fryers. The KitchenAid stand mixer, a top item on Christmas lists and wedding registers, is out of stock. The handful of vacuums and styling tools from Dyson that arrived in stores were quickly delivered to online shoppers, leaving stores empty. However, at Amazon, Target and Best buySimilar products are available – and in some cases, even at sky-high promotional prices.

Parent company KitchenAid Whirlpool and Dyson did not respond to multiple requests for comment.

Trouble is growing

Customers carry bags from a Bed Bath & Beyond store on April 10, 2013 in Los Angeles, California.

Kevork Djansezian | Getty Images News | beautiful pictures

Likewise, suppliers and licensees are concerned about the speed at which Bed Bath is changing – especially as the retailer launches its own brands of bedding, kitchenware and more. As some brands and manufacturers see Bed Bath drop orders quarter after quarter, they’ve turned to other stores and websites.

Not-so-slight relations exacerbated Bed Bath’s supply chain during the first two years of the pandemic, as all retailers had to deal with temporarily shuttered factories and clogged ports. congestion and truck driver shortages. The company lost $175 million in revenue in the three months ended February 26 because some of the items advertised in the circulars were out of stock.

Vendors, which have limited supplies, have to pick and choose where to ship their hot products. According to former executives, when sales plummeted at Bed Bath’s stores of the same name, purchases of those items – such as Dyson’s hair styling tools or Keurig’s coffee makers – will be more difficult.

At company meetings, Bed Bath small shipments became a regular theme – with sales leaders urging buyers to go to suppliers and ask for more. There are also internal concerns that Bed Bath & Beyond is losing its influence and relevance, former executives said.

Bed Bath troubles have increased in recent months. Its shares are down about 50% this year, its market capitalization currently stands at around $565 million.

About 60% of total net sales come from Bed Bath’s stores, but its footprint is shrinking. Last week, the company announced the first wave of about 150 stores closing its eponymous brand. Including the Harmon and BuyBuy Baby stores, the company grew from nearly 1,500 stores at the end of the first quarter of 2020 to less than 1,000 stores by the end of the year. As of February, Bed Bath had approximately 32,000 affiliates, including about 26,000 store affiliates and about 3,500 supply chain affiliates.

Meanwhile, the first wave of holiday merchandise has hit stores, including fall wreaths, pumpkin-print kitchen towels and other fall-themed decorations. Much of the merchandise in the stores is from Bed Bath & Beyond’s own brands, such as the budget-friendly family line Simply Essential.

During a CNBC visit in recent days, Bed Bath’s flagship store in New York City was rife with clues that the retailer might not have enough of the hottest items. A Dyson monitor comes in six vacuum models – but only one is available for purchase. A showroom for French cookware company Le Creuset showcased Dutch ovens in a variety of colors, but only had fresh orange ovens in stock.

Only one stainless steel SimpleHuman trash can, retailing for $149.99, is boxed and ready to go. However, there are small plastic trash cans from the Bed Bath-owned brand, scattered across many rows – selling for $3 each.

If you are contemplating suicide, contact Suicide & Crisis Hotline at 988 for support and help from a trained counselor.



Source link

news7f

News7F: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button