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The aisles at Bed Bath & Beyond may be stocked with pillows, but in the boardroom there are no soft landings.
On Wednesday, the embattled home goods retailer turfed CEO Mark Tritton and replaced him with board member Sue Gove on an interim basis. The company’s latest results were so bad, one analyst called it “the end days.”
The Emperor’s New Private Label
Tritton was fired the same day Bed Bath & Beyond (BBB) released its first quarter financials, showing sales fell a shocking 25% to $1.46 billion. And a quarterly net loss of $358 million marked a seven-fold increase from one year ago. “We are in the end days,” Anthony Chukumba, a managing director at Loop Capital, told Yahoo Finance. “These results were a dumpster fire, there’s no other way to put it.”
Tritton, who took over in 2019, did away with popular national brands and replaced them with new, private label offerings. But the longer lead times and additional work involved with private-label brands — including developing designs and contracting factories — left BBB more exposed to supply chain woes than its rivals. In the most recent holiday season, BBB was short of its 200 best-selling items, resulting in $100 million in lost sales. Even the company’s anointed savior might not be up to the challenge:
- Activist investor Ryan Cohen, the billionaire behind pet retailer Chewy and the chairman of GameStop, took a 9.8% stake in BBB and negotiated three new board seats earlier this year. Cohen came in with ambitious plans, including a sale of the lucrative Buybuy Baby chain, which the company is still exploring.
- “Everything that Ryan Cohen has said to this point has been nonsensical,” Chukumba said. “He said the company could easily be taken private, that’s not the case. He said Buybuy Baby was worth many multiples of the entire market cap. That’s not the case. There was no strategy, the emperor has no clothes.”
Gove acknowledged that the company will need to reverse course on Tritton’s private label push, telling analysts “we’re focused on improving the category mix.”
Sweat It Out: Earlier this week, Bank of America analysts alleged BBB is in such dire straits that stores have been turning the air conditioning down to save money. The company told media outlets that it hasn’t directed stores to adjust their thermostat, nor has it changed its corporate utilities usage policy, but didn’t explicitly deny that knobs have been turned. It does give new meaning to sweating it out over your next big purchase.