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Bed Bath & Beyond Inc. BBBY is on track with its planned rollout of Owned Brands. In the latest development, the company launched its seventh Owned Brand product line on Oct 4 — the Studio B, which is a home décor collection. The brand features modern designs for everyday living at an affordable price. The collection includes décor bedding, bath items, dining and accent furniture. The Studio 3B collection offers more than 600 products designed to seamlessly fit into any home, particularly apt for urban and small living spaces.
The Studio 3B products will be exclusively available at Bed Bath & Beyond stores and on bedbathandbeyond.com, with options like in-store or curbside pickup, and same-day delivery in some locations.
As part of its three-year transformation plan, Bed Bath & Beyond is on an assortment expansion spree. It plans to launch at least eight Owned Brands in fiscal 2021. It expects to introduce at least 10 Owned Brands in the next two years. The company highlighted that the new Owned Brands will cater to consumer needs across segments such as bed, bath, kitchen; dining, storage and organization; and home decor. The products will form part of the company’s key category that contributes more than 60% to its revenues.
In the first half of fiscal 2021, Bed Bath & Beyond launched six of the planned eight Owned Brands. It rolled out three private-label brands (Owned Brands), including Nestwell, Haven and Simply Essential, in the first quarter of fiscal 2021. In the fiscal second quarter, it launched three more private labels, including Wild Sage, Our Table and Squared Away.
The Simply Essential assortment line has been thoughtfully designed for meeting the needs across every room of a house. It is the company's first full-line assortment at opening price points. Nestwell is an assortment line, including quality bed and bath goods. The Haven is a bath brand, which offers spa-inspired organic cotton products and more.
The products offered by Our Table, Wild Sage and Squared Away brands are ideal for college students to get an organized set-up at their campuses. The Our Table line comprises more than 1,100 products, including modern cookware, bakeware, food prep, kitchen gadgets & utensils, kitchen linens, and dining & barware products. Wild Sage is a youthful, eclectic collection of about 600 stylish housewares for bedrooms, bathrooms, dining rooms and the living space. Squared Away offers nearly 300 storage items for the kitchen, closet, bathroom and organization throughout the home.
Management expects the sales penetration of Owned Brands to grow from 10% to nearly 30% within the first three years. The company expects to boost the gross margin by strategically managing costs and sourcing. Another major step in its comprehensive growth strategy is its plans to launch thousands of products, exclusively available only at Bed Bath & Beyond.
Bed Bath & Beyond is focused on boosting consumers’ shopping experience by offering a wide range of home-related merchandise. Its moves to expand the Owned Brands assortment are expected to create substantial opportunities for long-term growth. This along with its store-optimization efforts as well as digital and omni-channel expansion positions the company for growth.
The aforementioned launches indicate that the company is well ahead of its target of introducing at least eight Owned Brands by the end of February 2022.
Overall, shares of the Zacks Rank #5 (Strong Sell) company have declined 48.2% in the past three months compared with the industry’s 2.6% fall. The recent fall in the company’s share price is attributed to the sluggish second-quarter fiscal 2021 results. The dismal quarterly performance mainly resulted from supply-chain challenges, higher-than-expected cost inflation and a drop in-store traffic, owing to the rise in COVID-19 Delta cases, particularly in key markets like Florida, Texas and California.
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All the factors occurred in the normally strong August month, which led to a sharp decline in sales from the prior year. Industry-wide concerns, including port congestions and elevated transportation costs, further dampened the quarterly results. Management noted these headwinds are likely to persist during part of the holiday season, thus, crushing hopes of a swift economic recovery.
Better-Ranked Retail Stocks to Consider
Ulta Beauty Inc. ULTA currently sports a Zacks Rank #1 (Strong Buy). It has a long-term earnings growth rate of 13%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bath & Body Works, Inc. BBWI, with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 13%.
Tractor Supply Company TSCO, also a Zacks Rank #2 stock, has a long-term earnings growth rate of 8.8%.
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