The CEO of Bed Bath & Beyond has resigned following poor results and not meeting expectations for Q1. However, as a new CEO has come in, and bought 50,000 shares, the retailer experienced a surge in its share prices. So, what's happened?
In late June, Mark Tritton, the CEO of Bed Bath & Beyond was ousted from the company. So was its Chief Merchandising Officer. Tritton has been in the role since 2019, but was ejected from his position following the results of its quarterly update. According to a statement from the retailer, it was ‘time for a change in leadership’. He is also stepping down as a member of the board, and President.
The annual results for the retailer showed that its online sales dropped 21 percent YoY, as well as a 27 percent decline in its digital sales. There have been more than $347 million in net losses, the results showed.
Sales fell to $1.46 billion, which is 25.12 percent less than the year prior ($1.95 billion). What’s more, this did not meet the expected $1.51 billion projected by Wall Street. This prompted a sharp decline in its share prices, dropping from USD 6.53 to USD 4.99 in a single day.
Analysts were going nuts about this decline, with some projecting that the future of Bed Bath & Beyond would be bleak. “We are looking at a situation in which this company is probably not going to be around. But no, it’s not going to take years. We could be talking about months at this point. We are in the end days,” said Anthony Chukumba, the MD of Loop Capital to Yahoo Finance.
It all looked pretty bad, to say the least. However, as Tritton stepped down from the role, Sue Gove has taken place as the interim. CEO. While the firm Russell Reynolds is on the lookout for a permanent person to fill this position, Goves has bought 50,000 shares of the retailer. She now has 105,587 shares, increasing her amount by 90 percent.
Two other board members also bought 10,000 shares at under $5 apiece. And this prompted share prices to skyrocket by almost 22 percent. The share prices went from USD4.47 to USD5.80 on Thursday, 7th July.
In the statement from Bed Bath & Beyond, the business knows that it’s time to switch things up. “After thorough consideration, the Board determined that it was time for a change in leadership,” shared Harriet Edelman, the Independent Chair. “Our banner’s heritage is built on the premise that when customers are shopping for the home, Bed Bath & Beyond is the perfect destination for unique solutions and inspiration.”
Edelman went on to explain that the business needs to improve its offering to consumers, drive further growth and ‘unlock the value of the banners’.
“We are committed to addressing the urgent issues that have been impacting sales, profitability, and cash flow generation,” she said.
With the announcement of Goves as interim CEO, Edelman expressed that she brings the “right combination of industry experience and knowledge of Bed Bath & Beyond’s operations to lead the Company, focus our resources, and revise strategy, as appropriate.”
And Goves isn’t blind to the improvements that the business needs to make. “We must deliver improved results. Our shareholders, Associates, customers, and partners all expect more,” she said in the statement. “We are committed to providing customers with a one-stop destination to meet their needs through our assortment, experience, and services, whether online or in stores.
“Top-tier execution, careful management of costs, greater supply chain reliability, prudent capital spending, a stronger balance sheet, and robust digital capabilities will all be important to our success. I’m eager to start working more closely with our leaders and our Associates across all banners to make the necessary strategy adjustments and create a brighter future for Bed Bath & Beyond Inc.”
So will this turn the business around? Or is it a small spike that will fall back to its previous decline? While the news of an interim CEO buying 50,000 shares and the strong promise of improving the business’ results, some analysts aren’t quite convinced.
According to Forbes, Bed Bath & Beyond’s market value has declined by $2.7 billion in the last year, dropping from $3.1 billion to $400 million in a single year.
So, what’s next on the agenda for Bed Bath & Beyond, and what will be its first step towards recovery? First, find a new CEO. According to Edelman, Russell Reynolds will be on the lookout for an appropriate successor. “[We] want a focus on merchant skills, modern retailing, digital and omni capabilities, but sharp skills and emphasis on operations execution, cost-effectiveness and balance sheet,” she said.
Bed Bath & Beyond also needs to sort out its online offering. According to the business’ CFO, Gustavo Arnal, digital sales account for 40 percent of the business’ revenue. “What we will continue doing now, even on an accelerated basis, is look at the overall profitability of the stores and look at the geographic dispersion to see where they complement buy online, pick up in-store,” he said in a statement.
It seems that Bed Bath & Beyond needs to be a little less ambitious with its strategy, focus on getting back to the basics, and getting them right.
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