A person walks into a Bed Bath & Beyond store on October 01, 2021 in the Tribeca neighborhood of New York.
Michael M. Santiago | Getty Images
Bed Bath & Beyond is exiting one of its private label brands, Wild Sage, about a year after the company made an aggressive push into exclusive brands, touted at the time as a linchpin of its turnaround strategy.
A spokeswoman for the home goods retailer confirmed the brand was being discontinued.
The move is likely just the start of bigger changes for Bed Bath and its merchandising approach as it tries to reverse declining sales, appease activist investors and win back shoppers. The retailer has faced inventory and supply chain issues, initially missing out on hundreds of millions of dollars in sales due to out-of-stock items and more recently an abundance of unwanted products lingering in warehouses and on store shelves.
Bed Bath is also looking for a new leader after the board announced in late June that CEO Mark Tritton and Chief Merchandising Officer Joe Hartzig had left the company. Its chief accountant also left in June.
In a company statement, Bed Bath & Beyond said private brands — which it calls “own brands” — “have a place in our assortment.”
“Customer response has been positive and we are very pleased with the strength of several private label brands, such as Simply Essential, which provide entry-level price points,” the company said. “At the same time, we recognize that our customers want a better balance between private and national brands, and we are making the necessary changes to the assortment to improve the customer experience and drive sales and traffic.”
Bed Bath said it will provide more updates on its strategy this month. Its spokeswoman did not say whether the company is considering phasing out other private brands.
Private labels became a central part of Tritton’s vision and a dominant part of Bed Bath’s stores. Tritton, a Target veteran, joined Bed Bath in 2019 and launched a playbook similar to the one used by the budget-chic retailer. He oversaw the unloading of stores and the debut of lines of bedding, kitchenware and more that could not be found anywhere else.
Bed Bath launched nine private brands starting in the spring of 2021. One was Wild Sage, a brand the company described as “stylish, eclectic, free-flowing bedding, decor, furniture, bath products and linens created for young adults (and the young in the heart).” The first collection launches in June 2021, just in time for back-to-college season.
Still, some shoppers find the new brand names disorienting — and less appealing. Instead of seeing large displays of well-known national brands, they saw displays of bedding, furniture and tableware under a name they didn’t recognize.
Same-store sales plunged 27% for the Bed Bath & Beyond banner in the latest quarter ended May 28.
Rapid change, alienated customers
After the company’s last earnings report at the end of June, board member and interim chief executive Sue Gove said the company’s sales results “did not meet our expectations”.
Jason Haas, a retail analyst at Bank of America Securities, said the retailer is alienating customers by moving too quickly. It also removed its popular 20% off coupons, a move it has since reversed.
“If they released these brands at a more measured pace and layered them [with national brands] and the customer became a little more familiar with seeing them on the shelf, it would have been more successful,” he said.
In addition, he said, Bed Bath ended up compounding supply chain issues related to the Covid pandemic. Almost every retailer dealt with congested ports and truck shortages, but private label goods typically have longer delivery times because they are manufactured and shipped from overseas. National brands tend to have merchandise that can get to stores faster than U.S. warehouses, Haas said.
There are signs of the end of Wild Sage on Bed Bath’s website. His wares are heavily discounted, including a $7 tie robe, down from its original price of $35, and a 16-piece terracotta dinner set for $16, down from $80. Many other Wild Sage items are out of stock after being listed at up to 90% off.
As Bed Bath moves toward more national brands, however, it may face another kind of problem. Suppliers may be reluctant to work with the retailer or ask for upfront payments as the company’s coffers quickly dry up.
Bed Bath reported approximately $108 million in cash and equivalents in its fiscal first quarter, down from $1.1 billion a year earlier. Its net losses swelled to $358 million from a loss of $51 million in the same period in 2021.
For now, the company is still able to draw on its existing $1 billion revolving credit facility from JPMorgan Chase, according to a quarterly filing with the Securities and Exchange Commission.
As of May 28, Bed Bath said it had $200 million in outstanding loans under the loan.
Still, analysts believe the home goods retailer will need more cash to weather the turnaround.
Bed Bath Chief Financial Officer Gustavo Arnal said on a conference call in June that the company still had “sufficient liquidity” with its credit facility and that it had brought in consultants from Berkeley Research Group as well as financial advisers to seek additional capital.
“There are ways we’re exploring to even further increase our liquidity and get through the working capital cycle, especially in the next two quarters given the seasonality of our business,” he said on the call.
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