Bed Bath & Beyond CEO steps down after big earnings miss in Q1
Yahoo Finance Live anchors discuss first-quarter earnings for Bed Bath & Beyond.
Video Transcript
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- Bed Bath & Beyond shares are getting hammered free market after announcing CEO Mark Tritton is out. Tritton will be replaced by Sue Gove, who will serve as interim CEO. This is on the back, guys, of a dismal, dismal, dismal, and dismal quarter from Bed Bath & Beyond. This is not the first dismal quarter from the company. By my estimation, this is the third in a row, and Tritton, you see there on the screen who was brought in November 2019 to turn the company around.
He gained some early traction, in fact, doing that, has lost complete traction over the past three months as he tried to just change the stores, I think, too quickly. And in the way I'm looking at this is he had his Ron Johnson moment. Ron Johnson was the former CEO of JCPenney. He tried to just do too many things too fast, change the brand, and it all blew up in his face. And I think that's what you're seeing here and also, too, just not properly managing the supply chain and just managing the business. And he's out today.
- Yeah, most notably here, of course, with the CEO changeover, the prior one to this was Tamares, who had actually left, Steve Tamares, as a result of an activist campaign. And so when you still do have an activist kind of looming over this broader operation at Bed Bath & Beyond, looking through a lot of the details here in this report, there was really nothing good to hang your hat on at all. In fact, it was all, to your point--
- Dismal.
- --dismal, exactly. And so with all of this in mind, I think it does come with the backdrop more broadly, you'd think across the competitive landscape. Who does Bed Bath & Beyond, across so many of the same categories in a trade down environment, have to go up against? It's an Amazon. And even though I might not purchase from Amazon, I know a lot of other consumers in those same product categories that Bed Bath & Beyond has, are instead going to where they can get those prime deals. And that continues to be either Amazon on one front or the Targets or the Walmart homegrown brands where they can walk in store and pick those up easily.
- Or they're not buying it at all, right? And that's really what we saw from Target. If Target comes out and says as they did, the place where people are not buying is in home goods, and all this company sells is home goods, that's going to be a problem. So you have that macro backdrop then you have the specifics of what you were discussing in terms of this quest to try to remake the company.
Now, make no mistake, Bed Bath & Beyond needed to be remade. I think we have to really emphasize that point, So I don't know. You could say his heart was in the right place, or the spirit was in the right place, the motivation was in the right place. It needed to be done. The stores are a mess, simply put. You kind of wend your way around in those things, and it's difficult to find stuff. So you needed to redo them, but maybe, you had a combination of factors here, where now you have the macro really coming to bear, along with the changes that were attempted.
- Yeah, so let's look at these results real quick. You have same store sales at the Bed Bath & Beyond banner down 27%. Yeah, gross margin's down 890 basis points, I believe, year over year. They ended the quarter with only $107 million in cash. Inventory up 13%. Against that, 23% overall sales decline. I cannot stress this enough, no one in retail is posting results like this. No one, not even close, which really suggests that Bed Bath & Beyond is headed into a very dark place.
I wouldn't yet put it into the same characterization of what I saw back in Sears when they were going down into the death spiral about 6, 7 years ago, but this results in this quarter and this leadership change is telling you that there are structural problems with this company and that it is borderline irrelevant in this world in retail right now.
- It's going to be really interesting to see who comes in. Sue Gove is just the interim CEO. Like who wants to take this on?
- Well, they need to raise cash. You cannot go into the holiday shopping season if you're a Bed Bath & Beyond with $107 million in cash. Your inventory is up 13% year over year. You have to do something. Sue has to make some big moves, and she's going to have to do it very quickly.
- I don't think I've ever seen an earnings report have at the very top of it Q1 highlights and the next line be net sales declined 25%.
- Sounds like low lights. I will add this, too. You mentioned activist, Brad. A source tells me that Ryan Cohen, he was an activist investor here in Bed Bath & Beyond. He took a stake in early April, pushed for some changes here. He's still an investor in Bed Bath & Beyond. It's unclear if his stake is still around the 9.8% stake he took in April, but still, I would not be surprised if you do hear from Ryan Cohen who, of course, is the executive chairman of GameStop, the king of all the meme stocks. I might be surprised to hear from him either today or at some point this week as he tries to just save his investment in the company.
- How's his record so far? He's still up on GameStop, I think, from where he took that stake, but this--
- Tough day for him in Bed Bath.
- Yeah.
