Bed Bath & Beyond plans to close 42 brick-and-mortar sites by the end of February and is preparing to remodel 150 stores this year as part of its real estate strategy shift.
The Union, New Jersey-based home-goods retailer offered an update on the scaling down of its property portfolio and its efforts to modernize a number of its nearly 1,000 Bed Bath & Beyond stores during a third-quarter earnings call Thursday.
Like many of its fellow retailers, Bed Bath & Beyond is reevaluating its brick-and-mortar sites, shutting poor performers, making improvements in profitable stores and beefing up its online sales, a process that started even before the pandemic forced temporary store closures last year. The company has not only continued its store closings but has sold or is in the process of selling five of its noncore businesses, generating $600 million of revenue.
"This put us in a position to start fiscal '21 with a more cohesive set of core businesses," Bed Bath & Beyond President and CEO Mart Tritton said.
"Initially, we identified about one-third of these stores to be closed by the end of the fiscal year," he told analysts. "We have since accelerated the pace of targeted store closings this year from 70 to about 120 stores, with certain stores closing earlier than planned due to having efficiently sold down store inventory during the closing process."
Bed Bath & Beyond closed four stores in the third quarter, another 75 in December "and we are currently liquidating an additional 42 stores," Hartmannsaid.
The real estate optimization program "is designed to not only ensure our stores are a strategic asset for us, but also to ensure that we have them at the right locations to deliver more sustainable sales growth, improved margins and greater cash generation," according to Hartmann.
Bed Bath & Beyond also reported on its progress moving from creating a new-store prototype to actually implementing its new design at 10 proof-of-concept stores in the Houston area, according to Hartmann. That testing stage will be done at the end of February, with the next wave of renovations expected to include 130 to 150 stores in fiscal 2021, he said.
The retailer plans to invest $250 million over the next three years to remodel about 450 stores that represent 60% of the company's revenue, according to Hartmann.
Its portfolio now includes just Bed Bath & Beyond, Buy Buy Baby, Harmon Face Values and Decorist.
As of Nov. 28 last year, Bed Bath & Beyond had 1,391 stores, including 951 Bed Bath & Beyond stores in all 50 states, Washington, D.C., Puerto Rico and Canada; 258 stores under the names of World Market, Cost Plus World Market or Cost Plus; and 129 stores under the names Buy Buy Baby, Harmon, Harmon Face Values or Face Values.