• Jennifer Marks

4 takeaways from Bed Bath & Beyond’s Q4 call

Q4 digital sales up, profit down

Union, NJ – “We’re not going to cut our way to greatness” and other reflections on the business from yesterday’s BBB analyst call.

New products, new services and the impact of ecommerce on store traffic were among the hot topics during Bed Bath & Beyond’s fourth quarter conference call yesterday evening.

“The digital world is ramping up and ramping up quickly, and the bricks-and-mortar world will suffer for it and there will be ramifications,” ceo Steve Temares told analysts.

Defending the company’s investments in omnichannel, he added: “Retail is littered with people who didn’t invest enough or invested too late.”

Here are a few strategies BBB and its divisions are employing to escape that fate:

The argument for bricks & mortar. Asked about how many stores are necessary in the e-commerce era, Temares said the company has anticipated the erosion of store traffic for years and has been evolving its formats to address it. He also argued that if BBB’s digital banners don’t cannibalize their own store sales, someone else will. “We’re not going to cut our way to greatness,” he added.

Taking the hit on free shipping and coupons. Dropping its threshold for free shipping from $49 to $29 took a bite out BBB’s margins. So did higher coupon redemption. Neither is going away. Temares described the $29 breakpoint as “the sweet spot for us.” As for couponing, BBB is leveraging technology to better understand specific customer triggers and to craft more personalized offerings. “But we’re not getting rid of the coupon. We understand the importance of that.”

Differentiated brands. Thttp://www.homeandtextilestoday.com/article/541849-bbb-touts-dna-tagged-pimacott-beddingemares pointed to the recent of expansion of the ED Ellen DeGeneres brand into kitchen linens, rugs, dinnerware and home décor; the launch of Wamsutta Pimacott bedding; and the launch of Magnolia Home rugs, pillows and throws by HGTV star Joanna Gaines online and in select stores. Some Texas stores will showcase the full Magnolia Home assortment in dedicated shops, he said. Also of note: the expansion

Bed Bath and Beyond Ellen of One Kings Lane furniture into outdoor living.

Pilot projects. BBB is testing a new service online that will connect consumers to professionals for home installation and other home improvement projects. Its new Shop the Room feature online offers curated rooms for the living room, bedroom and bathroom reflecting at least five different lifestyle trends. The company also plans to incorporate some aspects of the Decorist 

 

online interior design platform it recently acquired into its site.

For the fourth quarter ended Feb. 25, net earnings fell 3.0% to $268.7 million, or $1.84 per share. Sales increased 3.4% to $3.5 billion. Same-store sales rose 0.4%, with a 20% boost from digital comp offsetting a low single-digit decline from store comp.

Full-year net earnings tumbled 18.6% to $685.1 million, or 4.58 per share. Sales ticked up 0.9% to $12.2 billion. Same-store sales for the year fell 0.6%. Digital comp rose more than 20%, while store comp posted a low single-digit decline.

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