Bed Bath & Beyond shares jumped five per cent Wednesday.The Associated Press
Shares of Bed Bath & Beyond moved sharply higher at the opening bell Wednesday after executives rolled out a raft of initiatives to turn the struggling chain around.
Six weeks after using the company’s own dismal quarterly results as motivation for change, new CEO Mark Tritton said late Tuesday that Bed Bath & Beyond would spend $1 billion this year reinvesting in stores, upgrading technology, and on debt reduction and share buybacks.
Part of the funding for those manoeuvrs will come from the $252-million sale of its PersonalizationMall.com business, announced Tuesday.
“The financial strength of our business allows us to take the important steps needed to return capital to our shareholders and reduce our debt, while at the same time also investing in our customer,” said Tritton, who was brought aboard in November to redirect the company’s operations.
Shares jumped 5 per cent.
The Union, New Jersey, company withdrew its annual guidance last month after swinging to a $38.6 million third-quarter loss. Shares tumbled 8 per cent on that day, and have fallen 32 per cent this year.
“Our performance in the third quarter was unsatisfactory and underscores the imperative for change and strengthens our sense of priorities and purpose,” Tritton said at the time.
But same-store sales at Bed Bath & Beyond, a crucial barometer of a retailer’s health, have been negative since May 2017.
The announcement late Tuesday is the first major initiative under Tritton, the former chief merchandise officer at Target Corp. When industry analysts talk about the successful campaign to reinvigorate sales at Target Corp., Tritton’s name is usually mentioned.
Bed Bath & Beyond Inc. will devote $600 million on share repurchases, dividends and debt reduction, with a heavier weighting towards share repurchases.
Another $350 to $400 million is being marked for investments in stores, technology and supply chain infrastructure.
The company is also jettisoning inventory and, Tritton says, making wiser choices about what remains on store shelves.
“We’re closing at the moment with about 15 per cent less inventory,” Tritton said in a conference call. “So, we’re operating leaner and getting better terms, we just need to course correct in terms of the mix of merchandise and our focus.”