Bed Bath & Beyond said Wednesday it will launch more than 10 private labels over the next 18 months as part of a broader three-year turnaround plan.
The company will invest between $1 billion and $1.5 billion in its business through fiscal year 2023, according to a company press release.
Bed Bath & Beyond will also remodel stores, invest in technology and build on its "omni-always" approach. The retailer laid out the plan ahead of its first investor day.
Bed Bath & Beyond has been staging a turnaround for years now, but the recently announced plan provides greater clarity into those prospects.
As part of the plan, the company will launch more private labels — something investors criticized as lacking in the past — with the goal of tripling its penetration in that arena over the next three years. Owned brands are something CEO Mark Tritton has extensive experience in. Tritton joined the company just under a year ago from Target where he was chief merchant and oversaw the launch of more than 30 private labels.
The home goods retailer also announced plans to revamp its loyalty program, including cutting back on its iconic coupons to provide a clearer price-value proposition, executives said on a call Wednesday. Looking forward, the retailer wants to use the program to incentivize customers to not only shop across multiple categories but also across different banners and channels. To help with the latter, Bed Bath & Beyond is pushing forward with its omnichannel approach and aims to build on the recent launch of store fulfillment options.
The company earlier this year introduced BOPIS and contactless curbside pickup, and as of May, said the service would be expanded to 90% of its fleet. Last month, Bed Bath & Beyond launched same-day delivery at its Bed Bath & Beyond and BuyBuy Baby stores through partnerships with Shipt and Instacart. To help support this digital push, the company announced Wednesday it would invest some $250 million over the next three years into its tech platforms.
But, Bed Bath & Beyond hasn't shifted its focus entirely away from its brick-and-mortar fleet. The company will invest about $250 million over the next three years to remodel some 450 stores, which represent 60% of its revenue. "This test and learn approach is expected to generate a median sales lift of approximately 4% and deliver a double-digit return on investment," the company said in its release. The retailer also plans to grow its share in the baby market by opening stores in new markets and grow sales by 50% — to $1.5 billion — over the next three years.
The retailer has been working to rightsize its physical footprint. In July, it announced plans to close some 200 stores by 2021 — mostly from the Bed Bath & Beyond banner — and expects EBITDA savings of around $100 million. About one-third of those closures are expected to be completed by the end of this year. The company earlier this month announced plans to sell off its Christmas Tree Shops banner to Handil Holdings.
Bed Bath & Beyond also released sales projections through fiscal 2023, which include stable comparable sales growth in 2021 against this year when the retailer received a pandemic-related boost from consumers stuck at home. By 2023, the retailer expects comps growth in the low- to mid-single digits. The company also expects to improve gross margin from about 35% in 2021 to at least 38% in 2023.
Bed Bath & Beyond also announced it launched a share repurchase program, totaling up to $675 million over the next three years.