Bed, Bath & Beyond Investors Watch Commodity Mix Amid Falling Sales

NEW YORK, NY, Sept 28 (Reuters) – Investors at Bed Bath & Beyond (BBBY.O) will be watching the home goods retailer’s second quarter results closely on Thursday for clues on how customers are reacting to its merchandise redesign.

The holiday season will be Bed Bath & Beyond’s “decisive time” to show shoppers that its new product assortment is worth checking out at any of its 770 stores, said Canada-based retail consultant Liza Amlani. .

“Now more than ever, connecting with the consumer and selling as many products at full price as [it] can is critical,” Amlani said.

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The retailer is not currently considering bankruptcy, a source familiar with the matter told Reuters last week, due to a recent loan that is expected to carry the business through 2023.

Analysts expect Bed Bath & Beyond’s same-store sales to fall 22.8% in the second quarter, according to Refinitiv estimates, even after the company was able to secure $500 million in funding before the holiday season. At the end of August, the company had pre-announced a 26% drop in comparable sales for the second quarter.

Bed Bath & Beyond declined to comment on its merchandising strategies.

Bed Bath & Beyond is not generally considered a go-to retailer for vacation shopping and is more known as a destination for dorm and apartment shopping; however, the company prepared its inventory with seasonal decor to take advantage of the shopping season.

“Their biggest challenge will be their product assortment,” Amlani said. “Bed Bath & Beyond’s product, price and promotions do not match.”

Customers are moving away from Bed Bath & Beyond’s own brands in favor of national brand products.

Mara Sirhal, director of merchandising at Bed Bath & Beyond, said on an August investor call that she expects rebalancing their assortment between national brands and store-owned brands to take several quarters. .

Investors will also pay close attention to its discounting strategy. Bed Bath & Beyond’s popular 20% off coupons have “conditioned the customer to expect markdowns,” Amlani said, which can be dangerous at a time when a business is trying to increase sales and increase sales. expand its gross profit margins, which were 23.8% in the first quarter.

Since August, Bed Bath & Beyond has posted positions for Pricing and Assortment Analysts, Loyalty Manager as well as Inventory Control Experts to determine optimal pricing strategies, increase customer engagement, grow its multi-brand loyalty program and boost sales, according to its careers site.

It is partnering with supply chain management and retail planning software company Blue Yonder to “develop store clusters and optimize assortments,” a Bed Bath job posting said. &Beyond.

Blue Yonder and Bed Bath & Beyond did not immediately respond to request for comment on the partnership.

Analysts at brokerage firm UBS expect Bed Bath & Beyond to use about $1.5 billion in cash flow over the next eight quarters. In addition to its cash flow problems, the company announced more than 150 store closures, canceled efforts to sell off its buybuy Baby chain of baby products and ended three of its store-owned brands.

Interim chief executive Sue Gove, who inherited the company in June, is expected to remain in her role for at least a year. She’s responsible for repaying part of the company’s multimillion-dollar loan, stocking stores with the national brands customers want, and revamping its promotional strategy.

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Reporting by Arriana McLymore in New York; Additional reporting by Mike Spector in New York; Editing by Josie Kao

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Ariana McLymore

Thomson Reuters

Arriana McLymore reports on the business of law, including the diversity of the profession, business practices, legal education and the career cycles of lawyers.