Bed Bath & Beyond continued to struggle in Q2 2022 with the retailer’s sales falling 28% in the quarter, which ended Aug. 27. The retailer expects a further 20% decline in comparable sales for the back half of the year as it focuses on heavy promotions to moved merchandise.
Buybuy BABY, which has been a bright spot for the retailer in the past, also posted a comparable sales decrease in the high teens. This is in contrast to growth in the high teens during Q2 2021.
However, Interim CEO Sue Gove said she is “confident that our current liquidity will enable the necessary changes we are implementing.” The company is aiming to weather recent cuts and net losses, which reached $366 million for Q2 2022, with the help of a $375 million loan it took out in late August.
The company also hoping the tides will turn in the future as it implements its turnaround plan. Bed Bath & Beyond’s Welcome Rewards loyalty program gained more than 1.3 million new members since the end of August to reach a total of 6.4 million members within months of its launch. Gove also is aiming to reduce costs by about $250 million during the second half of fiscal 2022.
The retailer’s turnaround plan, which was launched in mid-August 2022, includes:
- Shifting away from its private label-focused merchandising strategy in favor of established national and up-and-coming DTC brands;
- Shuttering 150 low-performing stores;
- Cutting 20% of its workforce across the corporate and supply chain divisions; and
- Leaning on Welcome Rewards to drive traffic, sales and customer retention.
These moves mark a significant change of course from the efforts spearheaded by former CEO Mark Tritton, who resigned in June 2022 following a 25% quarterly loss. Tritton had been heavily emphasizing the retailer’s private label brands, but the new strategy calls for eliminating three of nine labels and reducing the remaining labels to 20 percentage points of inventory.
“We are embracing a straightforward, back-to-basics philosophy that focuses on better serving our customers, driving growth and delivering business returns,” said Gove in a statement when the turnaround plan was unveiled. “In a short period of time, we have made significant changes and instituted enablers across our entire enterprise to regain our dominance as a preferred shopping destination for our customers’ favorite brands and exciting products.”
Bed Bath & Beyond also is struggling with the fact that activist investor Ryan Cohen, who owns approximately 11.8% of the company through his firm RC Ventures, is considering a sale of his entire stake. This news caused share prices to drop, but they also have been shooting up as a meme stock, which has caused significant volatility for shareholders. The retailer’s share price was nearly $6.25 as of Sept. 29, down 4% since the release of its quarterly results and 72% year-over-year.