A person walks into a Bed Bath & Beyond store on October 01, 2021 in the Tribeca neighborhood of New York City.
Michael M. Santiago | Getty Images
Bed Bath & Beyond canceled one of its own labels, Wild Sage, about a year after the company made a strong push toward exclusive brands, at the time billed as a mainstay of its transformation strategy.
A spokeswoman for the home goods retailer confirmed that the brand has been discontinued.
The move is likely just the beginning of bigger changes for Bed Bath and its business approach as it tries to reverse declining sales, placate activist investors and win back shoppers. The retailer has had inventory and supply chain problems, initially losing 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 store shelves.
Bed Bath is also looking for a new leader, after the board announced in late June that CEO Mark Tritton and chief trade officer Joe Hartsig had left the company. The chief accountant also left in June.
In a company statement, Bed Bath & Beyond said that private labels — which it calls “owned brands” — “have a place in our collection.”
“Customer response has been positive, and we’re very pleased with the strength of several owned brands, such as Simply Essential, providing opening price points,” the company said. “At the same time, we recognize that our customers want a better balance between owned and national brands, and we are making necessary changes to the assortment to improve the customer experience and increase sales and traffic.”
Bed Bath said it will provide more updates to its strategy this month. The spokeswoman did not say whether the company was considering phasing out other private brands.
Private labels have become an essential part of Tritton’s vision and a dominant part of Bed Bath stores. Tritton, a Target veteran, joined Bed Bath in 2019 with a book similar to the one used by the cheap, stylish retailer. He oversaw the dismantling of stores, the emergence of bedding lines, kitchen appliances, and more that can’t be found anywhere else.
Bed Bath launched nine specials beginning in the spring of 2021. One of them was Wild Sage, a brand that the company described as “chic, eclectic, and soulless bedding, decor, furniture, bathroom products, and table linens created for the young (and young at heart).” The first set launched in June 2021, just in time for the back-to-college season.
However, some shoppers found the new brand names to be confusing — and less attractive. Instead of seeing big displays of big-name national brands, they saw displays of bedding, furniture, and cutlery under a name they didn’t recognize.
Same-store sales fell 27% for the Bed Bath & Beyond logo in the most recent quarter, ending May 28.
Quick change and single clients
Following the company’s latest earnings report in late June, board member and interim CEO Sue Goff said the company’s sales results “do not live up to our expectations.”
The retailer is alienating its customers by moving too quickly, said Jason Haas, a retail analyst at Bank of America Securities. It also gradually phased out its popular 20% off coupons, a move it has since retracted.
“If they roll out these brands at a more measured pace and layer them [with national brands] And the client became more familiar with seeing it on the shelf, and it could have been more successful.”
Plus, he said, Bath ended up exacerbating supply chain issues related to the pandemic. Nearly every retailer has dealt with busy ports and a lack of trucking, but private-brand merchandise tends to have longer lead times since it’s produced and shipped overseas. Haas said national brands tend to have merchandise that can reach stores more quickly than US warehouses.
Wild Sage’s end signs are on the Bed Bath website. Her merchandise is available at deep discounts, including a tie-dye robe for $7, down from its original $35, and a 16-piece crockery cutlery set for $16, down from the original $80. Many other Wild Sage items are out of stock after listing at up to 90% off.
As Bed Bath switches to more national brands, it may run into a different kind of problem. Sellers may be reluctant to work with the retailer or ask for advance payments as the company’s coffers dry up quickly.
Bed Bath reported nearly $108 million in cash and cash equivalents as of May 28, down from $1.1 billion in the previous year. Its net loss ballooned to $358 million from a loss of $51 million in the same period in 2021.
For now, the company can still rely on a $1 billion asset-based revolving credit facility from JPMorgan Chase, according to a quarterly filing with the Securities and Exchange Commission.
As of May 28, Bed Bath said he has $200 million in outstanding loans under the loan.
However, analysts believe that the home goods retailer will need more cash to meet its turnaround.
Gustavo Arnal, Bed Bath’s chief financial officer, said on a conference call in June that the company still had “sufficient liquidity” with its credit facilities, and that it had hired advisors from Berkeley Research Group as well as financial advisors to seek additional capital.
“There are ways we are exploring to 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.