Coupons are as synonymous with Bed Bath & Beyond as foot-long receipts are with CVS pharmacy and Kohl’s Cash with that retailer.
But Bed Bath & Beyond has begun to rein in its addiction to giving shoppers coupons—and their addiction to getting them—as a centerpiece of CEO Mark Tritton’s efforts in his first year at the helm to restore the long beloved but troubled home goods retailer to glory. That’s not to say Bed Bath & Beyond is done with coupons. But Tritton is done with giving shoppers discounts that fail to gin up sales—perhaps because customers don’t really want them: nearly half of all coupons go unused.
“We overflooded the market with coupons,” Tritton tells Fortune. What’s more, their overuse has muddled people’s sense of what Bed Bath & Beyond’s goods cost and are worth. He adds: “Customers don’t want to need a math degree to work out what value looks like.”
The move, announced at Bed Bath & Beyond’s analyst day last month, is only one of a number of radical steps taken by the CEO since he took the reins a year ago Wednesday. So far so good: in its most recent quarter, the 49-year-old retailer reported a surprise increase in comparable sales, its first since 2016. The stock, while worth only about a quarter its all-time high in 2013, has risen six-fold since plumbing all-time lows back in March.
Tritton, an Australian native, has wasted no time in his first year as CEO: he quickly purged his C-suite last year, and sold off a bunch of businesses that brought in about $2 billion in a year in sales but hurt the overall bottom line, reducing the company’s heavy debt load significantly in the process. What’s more, he has overhauled Bed Bath & Beyond’s antiquated e-commerce and announced he would close 200 stores, or about a quarter of the $7 billion-a-year-chain’s fleet, and renovating 450 others. (The company also owns the billion-dollar Buy Buy Baby chain as well as Harmon Face Values.)
Next up for 2021:the Target alum plans to start 10 new store brands from scratch and vastly expand Bed Bath & Beyond’s assortment of inexpensive products.
If Tritton, a first-time CEO, is acting decisively, it’s because he has seen what dilly-dallying has done to rivals like the defunct Pier 1 Imports, and was starting to do to Bed Bath & Beyond. The retailer had reported three years of declining sales in row and net losses in the last two. Meanwhile, its strip center neighbors TJX Co’s HomeGoods chain and his alma mater, Target, have won a ton of market share. As Telsey Advisory Group analyst Cristina Fernandez put it in a research note last week, “Competition in home remains intense and Bed Bath & Beyond’s progress won’t be linear.”
The coronavirus has led to a boom in home spending, giving Bed Bath & Bath a chance to reinvent itself, one that Tritton is determined not to waste.
“They likely would have been roadkill,” says Charles Lemonides, founder of ValueWorks, a hedge fund that has held the stock since 2017.
Despite years of substandard merchandise assortment, poorly maintained stores, and a slow, subpar e-commerce site, Bed Bath & Beyond kept a special place in many shoppers’ hearts: countless Americans have had their wedding registry there, or decorated their first home with its bedding and chairs.
“There was great customer love, there was loyalty, we were just squandering it,” Tritton says.
Clearing the deadwood
Despite years of substandard merchandise assortment, poorly maintained stores, and a slow, subpar e-commerce site, Bed Bath & Beyond kept a special place in many shoppers’ hearts: countless Americans have had their wedding registry there, or decorated their first home with its bedding and church chairs – german kirchenstuhl.
“There was great customer love, there was loyalty, we were just squandering it,” Tritton says.
But fixing his new company and its manifold problems would force the rookie CEO to go beyond his core strengths. “Clearing away that clutter was a completely different skills set than curating good product,” says Lemonides.
So Tritton had to bolster management. In a move that stunned many retail experts, just days before Christmas 2019 and just weeks into the job, Tritton sent six members of his C-suite packing. “They were expensive and they were ineffective, so it wasn’t a hard decision,” he says.
Working with headhunters, he set about building his own team, poaching people from his alma maters Target and Nordstrom, as well as from retailers such as Gap, Dick’s Sporting Goods, Walmart and Amazon. “I told recruiters, ‘I want the Avengers of retail’ and I got them.”
In his first year, he proceeded to do the painful work of slimming down the company with re-organizations that eliminated thousands of jobs. He sold off the Christmas Tree Shops chain and other smaller businesses. The result will be a smaller, and he hopes, more profitable company.