A person walks into a Bed Bath & Beyond store on October 1, 2021 in the Tribeca neighborhood of New York.
Michael M. Santiago | Getty Images
Bed bath and 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 touted as the linchpin of its turnaround strategy.
A spokeswoman for the homewares retailer confirmed the brand was discontinued.
The move is likely just the start of bigger changes for Bed Bath and its approach to merchandising as it attempts to reverse declining sales, appease activist investors and win back customers. The retailer has struggled with inventory and supply chain issues, initially missing hundreds of millions of dollars in sales due to out-of-stock items and, more recently, a glut of junk persisting in stores. warehouses and on store shelves.
Bed Bath is also looking for a new leader, after the board of directors announced at the end of June that CEO Mark Tritton and director of merchandising Joe Hartsig had left the company. Its accounting manager also left in June.
In a company statement, Bed Bath & Beyond said 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 own brands, such as Simply Essential, offering opening pricing,” the company said. “At the same time, we recognize that our customers want a better balance between own and national brands, and are making the necessary changes to the assortment to improve the customer experience and drive sales and traffic.”
Bed Bath said it will provide more strategy updates this month. Its spokeswoman did not say whether the company plans to phase out other private labels.
Private labels have become a central part of Tritton’s vision and a dominant part of Bed Bath’s stores. Newt, a Target veteran, joined Bed Bath in 2019 and rolled out a playbook similar to that used by the chic discount retailer. He oversaw the decluttering of stores and the launch of lines of bedding, kitchenware and more not found elsewhere.
Bed Bath launched nine private labels starting in spring 2021. One was Wild Sage, a brand that the company described as “elegant, eclectic and free-spirited bedding, decor, furnishings, bath products and table linens created for young adults (and the young at heart).” The first collection was launched in June 2021, just in time for the start of the school year.
Still, some shoppers found the new brand names disorienting — and less appealing. Instead of seeing large displays of major national brands, they saw displays of bedding, furniture, and tableware under a name they didn’t recognize.
Comparable store sales fell 27% for the Bed Bath & Beyond banner during the last quarter, ended May 28.
Rapid change, alienated customers
After the company’s last earnings report in late June, board member and interim CEO Sue Gove said the company’s sales results were “not meeting our expectations”.
Jason Haas, a retail analyst for Bank of America Securities, said the retailer alienated its customers by moving too quickly. It also removed its popular 20% off coupons, a move it has since reversed.
“If they rolled out these brands at a more measured pace and layered them [with national brands] and for the customer to get used to seeing them on the shelves a little more, it would have been more successful,” he says.
Plus, he said, Bed Bath ended up compounding pandemic-related supply chain issues. Almost all retailers have faced congested ports and truck shortages, but private label goods tend to have longer delivery times because they are produced and shipped from overseas. National 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 deep discounts, including a tie-dye dress for $7, down from its original price of $35, and a 16-piece terracotta dinnerware set for $16, down from $80. of origin. Many other Wild Sage items are sold out after going on sale for up to 90% off.
However, as Bed Bath pivots 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 because the company’s coffers dry up quickly.
Bed Bath reported about $108 million in cash and cash equivalents as of May 28, up from $1.1 billion a year earlier. Its net losses swelled to $358 million from a loss of $51 million in the same period in 2021.
For now, the company is still able to draw on its existing $1 billion revolving credit facility based on JPMorgan Chase assets, according to a quarterly filing with the Securities and Exchange Commission.
As of May 28, Bed Bath said it had $200 million in borrowings outstanding under the loan.
Still, analysts say the home goods retailer will need more cash to weather its turnaround.
Bed Bath’s chief financial officer, Gustavo Arnal, said on a June conference call that the company still has “sufficient liquidity” with its credit facility and that it had brought in consultants from Berkeley Research Group as well. than to financial advisers to seek additional capital.
“There are avenues we are exploring to further increase our liquidity and navigate the working capital cycle, particularly over the next two quarters, given the seasonality of our business,” he said during of the call.