About a year after making an aggressive push into exclusive brands, which was at the time hailed as the cornerstone of its turnaround strategy, Bed Bath & Beyond is discontinuing one of its private labels, Wild Sage.
The brand is ending, according to a retailer of home products spokeswoman.
Bed Bath and its marketing strategy are probably only getting started on greater adjustments as the company works to boost revenues, placate activist investors, and win back customers. The company has experienced issues with its inventory and supply chain, missing out on hundreds of millions of dollars’ worth of sales initially owing to out-of-stock items, and more recently, a glut of surplus goods sitting in warehouses and on shop shelves.
Following the board’s announcement that CEO Mark Tritton and Chief Merchandising Officer Joe Hartsig had departed the firm in late June, Bed Bath is likewise on the lookout for a new CEO. In June, the company’s chief accounting officer left as well.
Bed Bath & Beyond claimed in a statement that private labels, or “owned brands,” “have a place in our assortment.”
“Customer response has been positive, and we are very pleased with the strength of several owned brands, such as Simply Essential, which delivers opening price points,stated by the company. “At the same time, we recognize our customers want a better balance of owned and national brands, and are making necessary changes to the assortment to improve the customer experience and drive sales and traffic.”
This month, Bed Bath stated it would provide more updates on its approach. If the business is thinking about retiring other private trademarks, that information was not provided by its spokeswoman.
In Tritton’s vision, private labels took centre stage and dominated Bed Bath & Beyond stores. Tritton, a former Target employee, joined Bed Bath in 2019 and introduced a playbook like that of the retailer’s inexpensive chic division. He handled the organisation of storefronts and the introduction of exclusive bedding, kitchenware, and other product lines.
Beginning in the spring of 2021, Bed Bath introduced nine proprietary labels. One of them was Wild Sage, a collection of “stylish, quirky, free-spirited bedding, decor, furniture, bath items, and table linens developed for young adults (and the young at heart),” according to the business. In preparation for back-to-school season in June 2021, the first collection debuted.
The new brand names, however, confused some customers and made them less enticing. Instead of seeing expansive displays of well-known national brands, they encountered exhibits of beds, furnishings, and platterware that bore an unfamiliar name.
For the most recent quarter, which concluded on May 28, Bed Bath & Beyond’s same-store sales fell by 27%.
Rapid change and dissatisfied customers
Board member and interim CEO Sue Gove stated that the company’s sales performance were “not up to our expectations” after the company’s most recent earnings report in late June.
According to Jason Haas, a retail analyst at Bank of America Securities, by expanding too hastily, the business alienated its customers. Additionally, it took away the widely used 20 percent off coupons, a decision it later changed.
“If they rolled out those brands at a more measured pace and layered them in [with national brands] and the customer got a little more familiar with seeing them on the shelf, it would have been more successful,” he said.
Additionally, he added, Bed Bath ended up exacerbating supply chain problems caused by the Covid epidemic. Trucking shortages and clogged ports affected almost every shop, but private-label products typically have longer lead times because they are made and sent from abroad. According to Haas, national brands typically have inventory that can be delivered to stores more rapidly from U.S. warehouses.
There are indications of Wild Sage’s demise on the Bed Bath website. Deep discounts are offered on the company’s goods. For example, a tie-dye robe that was once $35 is now only $7, and a 16-piece set of terracotta tableware that was once $80 is now only $16. After being listed for up to 90% discount, many other Wild Sage products are now sold out.
Bed Bath may encounter a different issue when it shifts to more national brands, though. As the company’s finances rapidly deteriorate, suppliers can be unwilling to cooperate with the shop or make forward payment requests.
In its fiscal first quarter, Bed Bath reported having about $108 million in cash and equivalents, down from $1.1 billion the year before. Its net losses increased from $51 million in the same time in 2021 to $358 million in 2022.
According to a quarterly report submitted to the Securities and Exchange Commission, the business is still eligible to access its existing $1 billion asset-based revolving credit line with JPMorgan Chase.
Bed Bath reported that as of May 28, it still owed $200 million on the loan.
Analysts predict that the retailer of home goods would still require additional funding to survive its comeback.
In a June conference call, Bed Bath’s chief financial officer, Gustavo Arnal, stated that the company still had “adequate liquidity” with its credit facility and had recruited Berkeley Research Group consultants as well as financial advisors to explore for further funding.
“There are avenues that we’re exploring to even increase further our liquidity and navigate through the working capital cycle, particularly in the next two quarters, given the seasonality of our business,” on the phone, he said.
