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Bed Bath & Beyond shares rise, after announcement to sell Christmas Tree Shops

Yahoo Finance's Brian Sozzi had a chance to speak to Bed Bath & Beyond CEO about its latest announcement to sell off some of its non-core assets including Christmas Tree Shops, its Linen Holdings business and a distribution center in New Jersey. He joins Alexis Christoforous on The First Trade to discuss the approximately $250 million dollar transaction.

Video Transcript

ALEXIS CHRISTOFOROUS: Things are getting real for Bed Bath and Beyond. The struggling retailer's selling off some of its non-core assets, including its Christmas Tree Shops, its Linen Holdings business, and a distribution center in New Jersey. This transaction is valued at approximately $250 million.

Uh, the stock is up. Um, more than 5% right now in the premarket, and Brian, I know you had a chance to catch up with Bed Bath and Beyond's CEO this morning. What did he have to tell you about changes underway?

BRIAN SOZZI: Yeah, early morning Zoom call with Bed Bath and Beyond's CEO, Mark Tritton. He was actually just finishing, uh, up his breakfast. But really this is-- what you're seeing is a company in the early innings by his own admission of unwinding all of the terribleness, uh, of prior management.

Uh, and keep in mind, Tritton just came to the company officially November 4, 2019. Stock's up about close to 70% since then. So for him, it's about getting his management team correct. He now has that. It's about selling off assets to raise cash. He has done that. They now have $2.2 billion in total liquidity. That is a huge arsenal to move forward.

Now going forward for him in 2021, it will be about getting the product assortment right, getting the store base right. They will close 200 stores. I suspect at some point, they may close even more than 200 stores. Uh, and all this will come to light on October 28. That is a very key investment-- investor day for them where they will outline a lot of these, uh, initiatives for next year.

ALEXIS CHRISTOFOROUS: You know, we-- we've seen Bed Bath and beyond struggle with inventory for years. You say they're going to close, uh, about 200 stores over the next couple of years. But what about the stores that remain open, Brian. What can we expect as consumers when we walk in? What are the shelves going to be like?

BRIAN SOZZI: Well, the shelves will be stocked. I think one of the things, uh, Tritton has realized is that for years, Bed Bath and Beyond has really not invested in its core infrastructure. Here's a company that has been behind the curve from, um, Target, which is Tritton's former employee, Walmart. You name it-- even Amazon.

So for him, it's about getting the infrastructure correct. Now he has that $2.2 billion in total liquidity, and he will use it to build out the company's infrastructure. You will go into stores likely next year, see a lot more private label brands, which Triton spearheaded at Target. We'll see a lot more of those products, but a more edited assortment. You're not going to go-- necessarily, walk in there and see groceries. That's where Bed Bath and Beyond was going into, groceries, at some point. That's not who they are. They're going to sell you the stuff you want for your home, get in and out the store, and that's it.

ALEXIS CHRISTOFOROUS: Getting back to the basics. Also, we have to note, digital sales at Bed Bat and Beyond up 89% last quarter. So again, that shift continuing for retailers. Uh, thanks a lot, Brian.