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Bed Bath & Beyond is phasing out one of its private labels, Wild Sage, about a year after the company made an aggressive push towards exclusive brands, at the time advertised as a centerpiece of its turnaround strategy.
A spokesperson for the home goods retailer confirmed the brand will be suspended.
The move is likely just the beginning of big changes for Bed Bath and its approach to merchandising as it seeks to reverse declining sales, appease activist investors, and win back buyers. The retailer ran into inventory and supply chain problems, initially losing hundreds of millions of dollars in sales due to out of stock items and, more recently, an excess of unwanted products in warehouses and on store shelves.
Bed Bath is also looking for a new leader, after the board of directors announced in late June that CEO Mark Tritton and Chief Merchandising Officer Joe Hartsig had left the company. His chief accountant also left in June.
In a company statement, Bed Bath & Beyond said that private labels – which it calls “proprietary brands” – “have a place in our assortment.”
“Customer response has been positive and we are very pleased with the strength of several proprietary brands, such as Simply Essential, which offer opening prices,” the company said. “At the same time, we recognize that our customers want a better balance between proprietary and domestic brands and are making the necessary changes to the assortment to improve the customer experience and increase sales and traffic.”
Bed Bath said it will provide further updates to its strategy this month. His spokesperson did not say whether the company is considering phasing out other private brands.
Private labels have become a central piece of Tritton’s vision and a dominant part of the Bed Bath shops. Tritton, a Target veteran, joined Bed Bath in 2019 and launched a playbook similar to the one used by the cheap chic retailer. He oversaw the decluttering of stores and the debut of bedding lines, kitchen supplies and more that couldn’t be found anywhere else.
Bed Bath launched nine private labels starting in spring 2021. One was Wild Sage, a brand the company described as “sleek, eclectic and stylish bedding, furnishings, furniture, bathroom products and tablecloths. free spirit created for young adults (and young at heart). ” The first collection was launched in June 2021, just in time for the return to college.
However, some shoppers found the new brands disorienting and less attractive. Instead of seeing big displays of big national brands, they saw displays of bedding, furniture, and tableware with a name they didn’t recognize.
Sales in the same store plummeted 27% for the Bed Bath & Beyond banner in the last quarter, which ended May 28.
Quick change, alienated customers
Following the company’s latest earnings report in late June, interim board member and CEO Sue Gove said the company’s sales results “did not live up to our expectations.”
Jason Haas, a retail analyst at Bank of America Securities, said the retailer alienated its customers by moving too quickly. He also phased out his popular 20% discount coupons, a move he has since canceled.
“If they launched those brands at a more measured pace and overlapped them [with national brands] and the customer got a little more familiar with seeing them on the shelf, they would have been more successful, “he said.
In addition, he said, Bed Bath ended up exacerbating supply chain problems linked to the Covid pandemic. Almost all retailers have faced congested ports and trucking shortages, but private label goods tend to have longer delivery times as they are manufactured and shipped from overseas. Domestic brands tend to have merchandise that can get to stores faster from US warehouses, Haas said.
On the Bed Bath website, there are signs of the end of Wild Sage. Her merchandise is available at hefty discounts, including a tie-dye suit for $ 7, reduced from its original price of $ 35, and a 16-piece terracotta dinnerware set for $ 16, down from the original $ 80. Many other Wild Sage items are sold out after being offered up to 90% off.
As Bed Bath caters to more national brands, however, it may run into a different kind of problem. Vendors may be reluctant to work with the retailer or request upfront payments as the company’s cash register runs out quickly.
Bed Bath recorded approximately $ 108 million in cash and equivalents in its fiscal first quarter, down from $ 1.1 billion a year earlier. Its net losses increased to $ 358 million from a loss of $ 51 million over the same period in 2021.
For now, the company is still able to tap into its existing $ 1 billion asset-based revolving credit structure 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.
However, analysts believe the home improvement retailer will need more cash to overcome its turnaround.
Bed Bath’s chief financial officer Gustavo Arnal said in a June conference call that the company still had “sufficient liquidity” with its line of credit and that it had enlisted consultants from the Berkeley Research Group and financial advisors to seek additional capital.
“There are avenues we are exploring to further increase our liquidity and navigate through the working capital cycle, particularly in the next two quarters given the seasonality of our business,” he said on the call.