Bed Bath & Beyond anticipates naming a new CEO in the “coming weeks” as its Board of Directors seeks to turn around what has been a rocky series of events for the retailer in 2019. In a letter to shareholders, Bed Bath & Beyond Chairman Patrick Gaston and Interim CEO Mary Winston commented on the company’s CEO search, and reaffirmed the company’s four go-ahead priorities, which include:
- Stabilizing and driving top-line growth, including a rapid refresh of nearly 160 Bed Bath & Beyond stores expected to be finished in advance of the 2019 holiday season;
- Resetting the company cost structure;
- Reviewing and optimizing the company’s asset base, including the portfolio of retail banners and an aggressive reduction of up to $1 billion of inventory over the next 18 months; and
- Refining Bed Bath & Beyond’s organizational structure, including the appointment of nine new independent board directors over the past few months.
“Furthermore, we expect to be able to take advantage of our heavy lease expiration cadence over the next couple of years, to close underperforming stores or relocate stores to improve sales and profitability on a per-store basis,” Gaston and Winston wrote.
Once a leader kitchenware, Bed Bath & Beyond has struggled to retain consumers who are turning to deep discounters, mass merchants and Amazon. The retailer has seen its stock collapse from more than $80 per share in January 2014 to as low as $7.40 per share in August 2019. After 27 consecutive years of gains, the company’s revenue declined in 2018, slipping 2.6% to $12 billion. Profits, which were above $1 billion just five years ago, are gone. Bed Bath & Beyond lost $137 million in fiscal 2018, which ended March 2 — its first annual loss since going public in 1992.
Co-founders Warren Eisenberg and Leonard Feinstein left the board of directors in April, and CEO Steven Temares later resigned due to pressure from three activist investors: Legion Partners Asset Management, Macellum Advisors and Ancora Advisors.
The firms, which together hold a 5% stake in Bed Bath & Beyond, complained that the retailer followed a “continued pattern of value destruction,” “repeatedly failed execution and strategy,” and suffered from “excessive executive compensation and poor alignment of pay with performance.”
Bed Bath & Beyond then cut its corporate staff by 7% and eliminated the role of COO as part of the cost and organizational restructuring. President and COO Eugene Castagna left the company, with other departures including several VPs, directors, managers and professional staff.
In August, Bed Bath & Beyond hired Goldman Sachs to evaluate its businesses. The retailer has had potential offers for several of its core businesses, including Cost Plus World Market and PersonalizationMall, according to The Deal.
The retailer expects to close 40 stores in its 2019 fiscal year.