Bed Bath & Beyond plans to close 200 stores over the next two years — or 1 in 5 of its nearly 1,000 U.S. retail outlets — in a move that company officials said will save between $250 million and $350 million and help transition the home goods retailer into a "digital first" operation.
The company already had plans to push customers toward online ordering and curbside pick-up, but slumping sales caused by the coronavirus pandemic accelerated that shift, CEO Mark Tritton said during an earnings call Wednesday.
The New Jersey-based company reported $1.3 billion in sales for the company's first quarter ended May 31, a nearly 50% plunge from the same period last year. Online and mobile app sales grew 82% in the quarter.
Bed Bath & Beyond is now converting some of its closed stores into what the industry calls fulfillment centers, where employees will grab products that online shoppers request to have delivered to their home.
Tritton said he recognized that store closings mean many people will lose their jobs. Bed Bath & Beyond employs 55,000 people across all its brands and 11,000 of them were furloughed until June 13.
"These decisions have not been easy and we are aware of their consequences, especially for those of our associates impacted by the furlough," Tritton said during the earnings call. "But I believe our responses are right for the short, medium and long-term health of our people and our business."
Tritton's comments mark the first mention of store closings this year for Bed Bath & Beyond, which last year said it would close 40 stores to help fund the opening of 15 new locations. Some of those closings are still underway, company officials said.
Bed Bath & Beyond is part of a growing list of retailers that are struggling as sales plummet in the coronavirus-slammed economy. Industrya wave of bankruptcies and thousands of permanent store closures this year.
Indeed, some of Bed Bath & Beyond's direct competitors — including Stage Stores – have filed for bankruptcy in recent weeks. Seattle-based cookware and kitchen chain Sur La Table said Thursday it is closing more than 50 of its 121 stores as it seeks bankruptcy protection., and
Bed Bath & Beyond, the parent company to Buy Buy Baby and Harmon Face Values, is looking to sell its Christmas Tree Shops and Cost Plus World Market divisions, Bloomberg reported.
The company temporarily closed about 90% of its U.S. and Canadian stores on March 23, except for a few Buy Buy Baby and Harmon Face Values locations. The move helped spur the steep drop in sales in the first quarter of its fiscal year, Tritton said.
Stores began reopening in early June. "We're looking at this holistically as a change in our business model, putting digital first," CFO Gustavo Arnal said during the analyst call.
The company will host its annual shareholders meeting on Tuesday.