Summary

  • Bed Bath & Beyond is an omnichannel retailer sells a wide assortment of merchandise in the Home, Baby, Beauty and Wellness markets.
  • The company operate under the names Bed Bath & Beyond, buybuy BABY, and Harmon, Harmon Face Values, or Face Values.
  • As of February 26, 2022, 953 stores are located in all 50 states, the District of Columbia, Puerto Rico and Canada and range in size from approximately 4,000 to 84,000 square feet.
  • Capital expenditures for Fiscal 2021 were $354.2 million, and for Fiscal 2022 are projected to be approximately $390.0 million to $410.0 million

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Bed Bath & Beyond Inc. (Nasdaq:BBAY, LSE:0HMI) and subsidiaries is an omnichannel retailer sells a wide assortment of merchandise in the Home, Baby, Beauty and Wellness markets. Additionally, the Company is a partner in a joint venture which operates retail stores in Mexico under the name Bed Bath & Beyond.

Recent developments

Bed Bath & Beyond Inc. Announces Completion of ABL Facility Upsizing and New FILO Loan1

Sept. 1, 2022; The Company has secured more than $500 million of new financing, including its newly expanded $1.13 billion asset-backed revolving credit facility ("ABL facility") and a new $375 million "first-in-last-out" facility ("FILO facility").  The refinancing of the ABL facility was led by J.P. Morgan, and Sixth Street Partners is serving as the Lender and Agent for the Company's FILO facility. The enhanced liquidity is expected to be utilized to support immediate strategic priorities to drive traffic and sales and gain back customer relevance, including rebalancing the assortment and inventory position.

Bed Bath & Beyond Inc. Announces Strategic Changes to Strengthen its Financial Positioning2

Aug. 31, 2022; Bed Bath & Beyond Inc. (NASDAQ: BBBY) today announced a strategic and business update focused on changes intended to meet the demand of its customers, drive growth and profitability,

The Company has identified and commenced the closure of approximately 150 lower-producing Bed Bath & Beyond banner stores. The Company continues to evaluate its portfolio and leases, in addition to staffing, to ensure alignment with customer demand and go-forward strategy.

The Company is working expeditiously to increase its National Brands inventory where possible and will increase inventory penetration by 20 percentage points over the long term.

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Financial Highlights

2022 Second Quarter Results

Sept. 29, 2022; Bed Bath & Beyond Inc. Reports Fiscal 2022 Second Quarter results ending August 27, 20223

Net sales of $1,437M declined (28)%, reflecting a Comparable Sales decline of (26)% and (2)% related to the impact from fleet optimization activity.

     • By channel, Comparable Sales declined (28)% in Stores and (22)% in Digital versus the fiscal 2021 second quarter.

     • Bed Bath & Beyond banner Comparable Sales decreased (28)% compared to the prior year period. Results exclude the impact from the Company's previously announced store fleet optimization program, which began in the second half of fiscal 2020.

     • buybuy BABY banner Comparable Sales decreased in the high-teens compared to growth of high-teens percentage during the fiscal 2021 second quarter.

GAAP and Adjusted Gross Margin was 27.7% for the quarter. Adjusted Gross Margin of 27.7% included a 260 basis point negative impact compared to last year from accelerated clearance activity as the Company works aggressively to right-size inventory levels commensurate with sales. Port-related transient supply chain costs also impacted Adjusted Gross Margin by 100 basis points versus the year ago period. Excluding the aforementioned 360 basis points of accelerated and transient costs, Q2 Adjusted Gross Margin would have been 31.3%.

SG&A expense on both a GAAP and Adjusted basis remain at lower levels compared to the prior year period, primarily due to cost reductions and lower rent and occupancy expenses on a lower store base following the Company's fleet optimization program. SG&A Margin for the quarter increased on a GAAP and Adjusted basis versus last year due to lower Net Sales. These results do not reflect significant cost optimization plans that began following the Company's Business & Strategic Update on August 31, 2022. Significant SG&A actions include a 20% reduction in force across corporate and supply chain, in addition to decreases in indirect spending throughout the organization. 

Adjusted EBITDA for the period was ($168) million reflecting lower Net Sales and lower Adjusted Gross Margin.

Net Loss per diluted share of $(4.59) for the quarter reflected approximately $1.38 of special items for the quarter. Excluding special items, Adjusted Net Loss per diluted share was $(3.22). Special items during the second quarter included restructuring costs driven by severance charges related to the departure of certain executive officers and the aforementioned reduction in force.

For the fiscal 2022 second quarter, the Company reported operating cash flow of approximately $(198.9) million. Investing cash flow of $(121.6) million was primarily driven by planned capital expenditures in connection with store remodels, new openings (related to buybuy BABY), maintenance and investments in technology. The Company has paused its new store and remodel programs for the remainder of fiscal 2022 which is expected to reduce its fiscal 2022 planned capital expenditures by approximately $150 million from a prior expectation of approximately $400 million.

Cash, cash equivalents, restricted cash and investments totaled approximately $0.2 billion and Total Liquidity was approximately $0.5 billion as of the fiscal 2022 second quarter, including the Company's prior $1.0 billion asset-backed revolving credit facility less borrowings of $550 million and approximately $136.4 million in letters of credit.

As announced on August 31, 2022, the Company secured more than $500.0 million of new financing, including a newly expanded $1.130 billion asset-backed revolving credit facility and a new $375.0 million FILO facility. Current liquidity is $0.85 billion, after repayments and borrowings that have occurred subsequent to the fiscal 2022 second quarter. Additionally, the Company's 12 million share ATM program has launched. Program-to-date, the Company has sold approximately three million shares for approximately $30 million. Proceeds from the Company's ATM are expected to be used to advance strategic financial objectives.

The Company is considering liability management transactions with particular focus on the 2024 bonds. Transactions could be launched in the third quarter and could include offers to exchange its current debt for new longer tenured debt or equity at exchange ratios related to the then-current value of the current debt. However, the transactions could take other forms or might not be launched at all. 

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Business Overview

Bed Bath & Beyond Inc sell a wide assortment of merchandise in the Home, Baby, Beauty & Wellness markets and operate under the names Bed Bath & Beyond, buybuy BABY ("BABY"), and Harmon, Harmon Face Values, or Face Values (collectively, "Harmon"). The company also operate Decorist ("Decorist"), an online interior design platform that provides personalized home design services.4

The company offer a broad assortment of national brands and a growing assortment of proprietary Owned Brand merchandise – including eight new proprietary Owned Brands ("Owned Brands") launched in Fiscal 2021 – in key destination categories including bedding, bath, kitchen food prep, home organization, indoor décor, baby and personal care.

The company operate a robust omni-channel platform consisting of various websites and applications and physical retail stores. The company's e-commerce platforms include bedbathandbeyond.com, bedbathandbeyond.ca, harmondiscount.com, facevalues.com, buybuybaby.com, buybuybaby.ca and decorist.com. The company also operate 953 retail stores, as of February 26, 2022, consisting of 771 Bed Bath & Beyond stores in all 50 states, the District of Columbia, Puerto Rico and Canada, 130 BABY stores in 37 states and Canada and 52 Harmon stores in 6 states. During Fiscal 2021, the company opened 4 new stores and closed 70 stores. As of February 26, 2022, its total store square footage, net of openings and closings, was approximately 27.9 million square feet. In addition to its U.S. and Canadian operations, Bed Bath & Beyond is a partner in a joint venture that operates 11 stores in Mexico under the name Bed Bath & Beyond.

Bed Bath & Beyond is driving a digital-first, omni-always growth strategy and optimizing its digital and physical store channels to provide its customers with a seamless omni-channel shopping experience. Digital purchases, including web and mobile, can be shipped to a customer from its distribution facilities, directly from vendors, or from a store. Store purchases are primarily fulfilled from that store's inventory or may also be shipped to a customer from one of its distribution facilities, from a vendor, or from another store. Customers can also choose to pick up orders using its BOPIS and contactless Curbside Pickup services, as well as return online purchases to a store. Customers can also make purchases through one of its customer contact centers and in-store through The Beyond Store, its proprietary web-based platform. These capabilities allow it to better serve its customers across various channels.

The company's merchandise and services are offered to customers through an omni-channel platform across its portfolio of banners, which consist of:

Bed Bath & Beyond - a leading specialty home retailer in North America that sells a wide assortment of domestics merchandise and home furnishings. Bed Bath & Beyond is a preferred destination in the home space, particularly in key product categories including bedding, bath, kitchen food prep, home organization and indoor decor.

buybuy BABY - a leading specialty baby retailer in North America that sells a wide assortment of baby essentials and nursery furnishings. BABY strives to build trust with parents by supporting them with what they need so families can celebrate every milestone – big and small – together.

Harmon Health and Beauty - offers an expansive assortment of leading name brand and private label personal care and beauty brands at deep everyday value.

Decorist - an online interior design company that makes decorating a home easy and affordable. Executed entirely online, Decorist's roster of over 190 professional interior designers help beautifully design any room in the home, staying within a client's style and budget. For customers not ready to start a full design project, they can consult Decorist's Design Bar to have quick design questions answered by Decorist's team of interior designers, completely free of charge.

As of February 26, 2022, the company had distribution facilities totaling approximately 4.4 million square feet, including its first regional distribution center, an approximately one million square foot facility in Frackville, Pennsylvania, which became operational during Fiscal 2021. The company also executed a lease for its second regional distribution center in Jurupa Valley, California, which is expected to be operational by late 2022. Ryder Systems, Inc. will operate these two regional distribution centers under a strategic partnership, with the objective of reducing product replenishment times and improving the customer experience. All of these capabilities allow it to better serve customers across its omni-channel network.

As of February 26, 2022, the company had approximately 32,000 associates, including approximately 26,000 store associates and approximately 3,500 supply chain associates. The company invest a great deal of time and effort in its relationship with its associates, and consider that relationship to be good.

Store Locations

Most of its stores are located in suburban areas of medium and large-sized cities. These stores are situated in strip and power strip shopping centers, as well as in major off-price and conventional malls, and in free standing buildings.

As of February 26, 2022, its 953 stores are located in all 50 states, the District of Columbia, Puerto Rico and Canada and range in size from approximately 4,000 to 84,000 square feet, but are predominantly between 18,000 and 50,000 square feet. Approximately 85% to 90% of store space is used for selling areas.

StatesStoresStatesStores
Alabama12New York60
Alaska1North Carolina26
Arizona22North Dakota2
Arkansas6Ohio25
California87Oklahoma9
Colorado20Oregon11
Connecticut14Pennsylvania25
Delaware4Rhode Island2
Florida69South Carolina13
Georgia25South Dakota2
Hawaii1Tennessee18
Idaho6Texas76
Illinois31Utah7
Indiana13Vermont2
Iowa8Virginia26
Kansas10Washington18
Kentucky8West Virginia1
Louisiana12Wisconsin 9 
Maine4Wyoming2
Maryland14District of Columbia1
Massachusetts21Puerto Rico2
Michigan30Alberta, Canada17
Minnesota9British Columbia, Canada11
Mississippi5Manitoba, Canada2
Missouri15New Brunswick, Canada2
Montana6Newfoundland and Labrador, Canada1
Nebraska5Nova Scotia, Canada2
Nevada9Ontario, Canada27
New Hampshire9Prince Edward Island, Canada1
New Jersey70Saskatchewan, Canada2
New Mexico5Total953

Capital Expenditures

Capital expenditures for Fiscal 2021 were $354.2 million, and for Fiscal 2022 are projected to be approximately $390.0 million to $410.0 million. The company's capital expenditures in Fiscal 2021 were related to digital and omni-channel capabilities, store remodels and investments in technology across a number of areas including supply chain, merchandising and finance.

The company continue to review and prioritize its capital needs and remain committed to making the required investments in its infrastructure to help position it for continued growth and success. Key areas of investment include: continuing to improve the presentation and content as well as the functionality, general search and navigation across its customer facing digital channels; improving customer data integration and customer relations management capabilities; continuing to enhance service offerings to its customers; continuing to strengthen and deepen its information technology, analytics, marketing, e-commerce, merchandising and finance capabilities; and creating more flexible fulfillment options designed to improve its delivery capabilities and lower its shipping costs. These and other investments are expected to, among other things, provide a seamless and compelling customer experience across its omni-channel retail platform.

References

  1. ^ https://bedbathandbeyond.gcs-web.com/news-releases/news-release-details/bed-bath-beyond-inc-announces-completion-abl-facility-upsizing
  2. ^ https://bedbathandbeyond.gcs-web.com/news-releases/news-release-details/bed-bath-beyond-inc-announces-strategic-changes-strengthen-its
  3. ^ https://bedbathandbeyond.gcs-web.com/news-releases/news-release-details/bed-bath-beyond-inc-reports-fiscal-2022-second-quarter-results
  4. ^ https://fintel.io/doc/sec-bed-bath-beyond-inc-886158-10k-2022-april-21-19103-473
Created by Asif Farooqui on 2022/10/06 03:54
     
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