Bed Bath & Beyond is struggling, and its turnaround plan includes shutting down about 40 locations this year and testing new ideas with “lab” stores that sell more home decor and food products.
Executives said this week that the company’s sales are still declining and it lost money last quarter. It expects to shutter more than 40 stores if the company cannot negotiate better lease terms at some locations—but the company also has plans to open 15 new locations. The company has 1,024 stores in the United States, Puerto Rico, Canada, and Mexico.
CEO Steven Temares told investors during an earnings call last week that Bed Bath & Beyond started experimenting with 21 “next-generation lab stores” last year, and they’ve fared better than other locations.
The lab stores have “a greater emphasis on home decor, food and beverage, and health and beauty care,” Temares said, and different layouts that aim to give shoppers better views of the merchandise.
Sales in the experimental stores were 2.2 percent higher than comparable Bed Bath & Beyond stores over the past four weeks, Temares said on Wednesday. Customers spent more and the company earned higher margins.
It plans to bring what it learns at those stores to locations across the country.
The home goods chain has struggled to compete with traditional retailers such as Walmart and Target, as well as online retailers Amazon ad discounters like TJ Maxx and its HomeGoods arm.
On Wednesday, Bed Bath & Beyond said it would nominate a new lead director to its board and revamp its corporate governance structure. It plans to announce additional changes to the board in the future.
The group wants Bed Bath & Beyond to trim its product selection and beef up the in-store experience to drive traffic back to stores. They’re also pressuring the company to improve margins by selling more of its own products.
Dissatisfied Activist Group
In a press release on March 26 from Bed Bath & Beyond, a response was made to a group of investors referred to as the “Activist Group” after the group’s attempt to replace the entire Bed Bath & Beyond board of directors that includes CEO Temares.
Three groups of investors, Legion Partners Asset Management, Macellum Advisors GP, and Ancora Advisors had stated that collectively, they held a 5 percent stake in the company, and motioned to replace the entire board of directors with 16 nominees at the company’s annual shareholder meeting.
“Bed Bath & Beyond regularly engages with our shareholders and welcomes constructive input focused on enhancing value,” Bed Bath & Beyond stated in response.
“Members of our board of directors and senior management team have met with and held several discussions with Legion and Macellum over the past few weeks. Ancora has not previously reached out to or engaged with the company.”
“We asked on several occasions for their suggestions and ideas for improving the company’s business but they did not provide any,” said the press release.
“We also invited them to participate in the board refreshment program we have been undertaking in recent years and are in the process of accelerating with investor input. Instead, they chose to publicly attack the company and provide their intent to nominate directors to take over the full board.”
The press release stated that the board is committed to the best interest of all shareholders and to the company’s strategic priorities.
“The board recognizes the value of fresh perspectives and diversity in the boardroom and regularly evaluates its composition to ensure it reflects the right mix of skills and expertise,” said the press release.
“Notably, as part of the board’s ongoing refreshment program, three new independent directors with relevant experience have been added during the last two years.”
Shares of Bed Bath & Beyond rose as much as 30 percent after the “Activist Group” called for the change in the board of directors.
NTD News reporter Jeremy Sandberg contributed to this report.