Bed, Bath & Beyond invests 40% of capex in digital efforts
Bed, Bath & Beyond has spent about 40% of its $177 million in capital expenses over the past six months on digital and omnichannel efforts, according to Diginomica, quoting comments made by CEO Steven Temares on the company’s fiscal second quarter earnings call last week.
Temares said that sales from our customer-facing digital channels, which doesn’t include orders placed in-store, add up to about 15% of the retailer’s current net sales, and that digital channel sales have grown more than 20% for the past 13 quarters, according to the Seeking Alpha earnings call transcript.
Temares also acknowledged that Bed, Bath & Beyond has started working with Accenture’s retail consulting practice to implement new human capital management and e-learning systems. The retailer’s in-house industrial engineering team is also working with an Accenture team to assess store operations to help expedite and roll out of best practices governing the operation of its stores.
Bed, Bath & Beyond last week reported falling sales and missed analyst estimates for its fiscal second quarter, and although it blamed some of the flagging performance on store sales that were affected by recent Hurricanes Harvey and Irma, the poor performance was really the continuation of a larger theme.
During the summer Temares said that the retailer was considering a plan under which it could close up to 100 stores over the next few years to try to get back on track. Then, last month, the retailer announced what it described as a "realignment of store management structure" that resulted in about 880 positions being cut.
The retailer was not terribly specific about what that 40% of its capex invested in technology over the last six months was actually spent on, which Temares said was focused on, "the development and deployment of new systems and equipment in our stores." He also talked some about Bed, Bath & Beyond's need to pursue greater inventory optimization, which it is doing in part by assessing opportunities for operational efficiencies in its e-commerce fulfillment centers.
Ultimately, the retailer seems committed to pursuing a digital transformation project — or, as Temares called it, a "customer service transformation" project. That will cost more money, and the retailer may need to endure more sales flops and tough cost-saving decisions before its sees the payoff it's looking for.