Calling all retail rainmakers — Bed Bath & Beyond (BB&B) is on the lookout for a new CEO after showing Mark Tritton the door earlier this month.
So, if you think you have the retail mojo for the gig, interim CEO Sue Grove, an independent director on the company’s board, spelled out in a recent statement what the retailer is looking for. And some might call it an understatement.
Grove said, “We must deliver improved results. Top-tier execution, careful management of costs, greater supply chain reliability, prudent capital spending, a stronger balance sheet, and robust digital capabilities will all be important…”
Oh, and what she didn’t mention, but I will, is this — those wanting the job need to bring fresh ideas to the table.
While retail observers credit Tritton with being the poster-child for private brands at Target, releasing more than 30 private labels there and making it work, they also point out that the then chief merchandising officer failed to come anywhere close to hitting the target with BB&B’s shoppers as sales continue to plummet and shares of the retailer’s stock are down a whopping 65% this year.
Others close to the action, including well-heeled investor Ryan Cohen, were unhappy with what he and others called Tritton’s overly ambitious strategy. They also claimed that Tritton’s vision for the chain’s redesigned stores failed to resonate with shoppers.
Critics also dunned Tritton for his inability to stem growing losses that included Q1 sales that were off some 25%. The fact that Tritton’s compensation — some $27 million over the last two years — did little to endear him to BB&B’s shareholders.
A day after Tritton was sent packing, BB&B named Laura Crossen as the new senior VP of financing. Crossen, who has been with the company for more than 20 years, replaces John Barresi, who quit a few weeks ago after accepting the position in May of 2021.
Analysts were quick to join a BB&B pile-on. In an analyst note from GlobalData, managing director Neil Saunders called Tritton’s dismissal “inevitable,” which is hardly surprising based on the retailer’s lackluster performance.
But he didn’t stop there, nor did he mince his words. He went on to say that BB&B had “been run into the ground and a change of management is the only way of restoring some credibility with investors.”
Those remarks were followed by a harsh report from Bank of America that suggested BB&B is scaling back on everything from store renovations, rewards programs, and even cutting back on air conditioning in the stores to lower expenses.
To give you an idea of how rapidly things fell apart at BB&B give a listen to this interview with former CEO Tritton from a little more than a year ago.
So, will we see a strategic turnaround, or will the retailer’s next chapter be titled Bed Bath & Beyond Hope?
For that, I wanted to call on Gerry Borreggine, CEO/President of bedding producer Therapedic International, who has been a supplier/partner with BB&B for more than two decades, and the retailer’s number-one utility bedding brand for the last 13 years.
With decades of being a supplier and partner to BB&B, Borreggine understandably has both a financial and emotional investment with the retailer. But even so, he acknowledges that “In the last year, anyone would be hard-pressed to say that Bed Bath & Beyond did much right.”
Commenting on the changes that took place under Tritton’s reign, Borreggine observed, “Often, an incoming CEO tends to make sweeping changes, perhaps to justify who they are. In this case, their new CEO came in with a vision of sweeping changes when, in my opinion, the company would have been better served by tweaking certain portions of the business.”
As both a customer and a supplier, Borreggine felt that, even before the arrival of Tritton, BB&B was losing its edge.
“In addition to being the go-to store for bedding, bath, and kitchen products, it had also earned the reputation as the place to shop for items when sending your children off to college,” he added.
But over time, “the stores got disorganized, the assortments got too broad and while it was still a fun place to shop, it was losing its edge and its ability to provide an exciting and almost magical shopping experience,” Borreggine explained.
When Tritton took over, instead of tweaking and addressing those issues, Borreggine and others say he tried to ‘Targetize’ BB&B, which meant abandoning many heritage brands that BB&B’s customers had come to enjoy and trust in favor of new, private label brands with names that meant nothing to loyal BB&B customers.
“Tritton took it way too far,” Borreggine maintains, adding, “So when customers came to the store looking for those heritage brands, often all they saw were unknown vanilla brands with names that somebody just made up and slapped labels on.”
During that period, the physical stores also lost their mojo. “There wasn’t lots of merchandise, and even though they weren’t about to be shuttered, the stores had the look as if they were,” Borreggine maintained.
The price BB&B paid for Tritton’s merchandising mishaps, decisions that Borreggine calls “radical and reckless,” showed up not only in the retailer’s balance sheet, but took what had been a vibrant and strong brand with a strong franchise and satisfied customers and turned it upside down.
The bedding maker also described Tritton as a master of excuses. “The guy never took personal responsibility for steadily shrinking sales,” Borreggine maintained, adding, “It was always everyone or everything else.”
A previous statement from Tritton while he was still CEO of BB&B backs up Borreggine’s assertions.
In that statement, Tritton said, “Macroeconomic factors, such as the disruption of the global supply chain, the Omicron variant, as well as the geopolitical turbulence weighing on consumer confidence, have uncovered more vulnerabilities than we could have foreseen at this stage of our transformation,” in explanation of the retailer’s disappointing Q2 performance.
So, does Borreggine see BB&B as a sinking ship?
He does not.
He believes BB&B is a strong brand. “Not that long ago, it was a sailing ship moving in the right direction. While it won’t happen overnight, it can be a strong sailing ship again because it is a solid brand with a solid, loyal base of customers,” Borreggine asserts.
So, the question then becomes what does BB&B need to do to recapture the momentum?
Borreggine offered this advice: “For starters, remerchandise the stores with the brands that customers know and trust. Then, focus on improving the omnichannel business. This is also a perfect time to shed bad locations, shutter underperforming stores while opening new stores in key markets that offer new growth.”
He also said that, in addition to returning to the categories that initially brought them to the party — bed, bath, kitchen, and beyond — the retailer needs to reestablish itself as the go-to store when sending kids off to college.
“There is a great residual reward from doing that,” Borreggine explains. “During our 20-plus years as a supplier to BB&B, we developed primary businesses with them in top-of-bed. In doing so, we not only created a strong base of customers for both, we also captured two different age groups of consumers.”
When asked what suppliers could do to help BB&B get back on track, Borreggine said, “We’ve already thought about this, and in keeping with the idea of getting back to your best sellers, we might, for example, take our best-selling sheet sets and add a new health benefit or consumer benefit. Simply put, we would help them by taking our proven winners and enhancing them even more.”
However, at the end of the day, much of what happens to BB&B will depend on who it brings in to run the show. “This time, they need to get it right. They need to hire someone with stability, not another ‘genius’ who thinks he can reinvent the retail world,” Borreggine said.
Stay tuned, folks. This story is far from over.