Bed Bath & Beyond said Wednesday that it is replacing CEO Mark Tritton as part of a leadership shakeup as the retailer’s quarterly sales and earnings sharply missed Wall Street expectations.
Shares fell more than 14% in premarket trading.
Sue Gove, an independent director on the board, will step in as interim chief executive, the company said. It said she will focus on reversing recent results, addressing supply chain and inventory issues and strengthening the company’s balance sheet.
“I step into this role keenly aware of the macro-economic environment,” Gove said in a statement, citing steep inflation and shifting buying habits.
Still, she said the company needs to improve its performance and that its first quarter results are “not up to our expectations.” Bed Bath & Beyond said it expects same-store sales to recover in the second half of the fiscal year, but did not provide a specific forecast.
The home goods retailer will also get a new chief merchandising officer. Mara Sirhal, who most recently served as general merchandise manager of health, beauty and consumables, will replace Joe Hartsig, who is leaving the company.
Here’s how the retailer did in the three-month period ended May 28 compared with what analysts were anticipating, based on Refinitiv data:
- Loss per share: $2.83 vs. $1.39 expected
- Revenue: $1.46 billion vs. $1.51 billion expected
The company’s net loss widened to $358 million, or $4.49 per share, from $51 million, or 48 cents per share, a year earlier. On an adjusted basis, the company’s net loss was $2.83 per share. That was more than the $1.39 that analysts expected, according to Refinitiv.
Sales fell to $1.46 billion from $1.95 billion a year earlier. Wall Street expected sales of $1.51 billion.
Same-store sales, a key retail metric, declined 24% in the quarter compared with a year ago, worse than the 20.1% drop that analysts expected, according to StreetAccount. Online sales fell by 21% year over year. The figures include a 27% drop for its Bed Bath & Beyond banner and a mid single-digits decline for the Buybuy Baby banner.
To win back sales, Gove told analysts in a conference call that the company will embrace a “back to basics mantra that prioritizes knowing our customer and delivering the experience they deserve whenever they interact with us.”
Bed Bath has been under pressure from activist investor Ryan Cohen, chairman of GameStop and co-founder of Chewy. Early this year, Cohen’s firm, RC Ventures, revealed a 10% stake in the company. Cohen called for sweeping changes, criticized top executives’ high pay and urged the sale or spinoff of the company’s baby gear chain, Buybuy Baby.
Bed Bath and Cohen came to a truce in late March. The retailer agreed to add new independent directors to its board and look into alternatives for the Buybuy Baby chain. But the challenges for the home goods retailer have not let up.
Shares of the company are down 55% so far this year and hit a fresh 52-week low earlier this month. On Tuesday, shares of the company closed at $6.53, down more than 3%.
Bed Bath on Wednesday said a board committee is looking into ways to maximize the value of its baby chain, including by boosting its registry program and by improving its website and app. Gove did not rule out a potential sale of the business.
“The business is a very attractive business and we’re not alone in appreciating its value. We know there is interest,” she said on the call with analysts.
Inventory in the quarter rose about 15% from a year ago. As the company racked up merchandise, shoppers’ demand for those goods fell, Chief Financial Officer Gustavo Arnal said. He said the company will move quickly to clear excess inventory, a problem other retailers including Target are also working through. The company will reduce full-year capital expenditures by at least $100 million to about $300 million, Arnal said.
Bed Bath & Beyond said it hired retail advisory firm Berkeley Research Group to look at its inventory and balance sheet. It has also hired national search firm, Russell Reynolds, to look for a permanent CEO.
Read the company’s earnings release here.
This story is developing. Please check back for updates.