Bed Bath & Beyond to spend $400 million on store remodels, digital, supply chain
Bed Bath & Beyond has begun to focus on its core assets — and streamline its portfolio — as the company moves to turnaround its ailing business.
The struggling home goods retailer announced capital expenditures for fiscal 2020 of approximately $350 million to $400 million, primarily for investments in stores, IT and digital projects, and supply chain infrastructure. Bed Bath & Beyond also plans to spend about $600 million this fiscal year on share repurchases, dividends and debt reduction.
"The financial strength of our business allows us to take the important steps needed to return capital to our shareholders and reduce our debt, while at the same time also investing in our customer,” said Mark Tritton, who was tapped as president and CEO of Bed Bath & Beyond in November. “This balanced approach to the use of our capital is expected to enhance shareholder value, improve the in-store and online experience and position our company to achieve our long-term objectives to deliver sustainable growth."
The company also announced it has agreed to sell its PersonalizationMall.com business to 1-800-Flowers.com for $252 million. Tritton described the move as “another important step towards simplifying our portfolio and deepening our focus on our core home, baby and beauty businesses.”
“By unlocking valuable capital from within our business, we can accelerate the company's ongoing business transformation and our efforts to re-establish Bed Bath & Beyond's authority in the home space,” he added.
Bed Bath & Beyond noted it has a strong cash position, including the expected net proceeds from the Personalization.com sale, proceeds from the sale-leaseback transaction announced in January and anticipated cash from operations.
The retailer also said it would continue to review its other brands, which include Christmas Tree Shops, World Market and buybuy Baby, and real estate “to support the transformation and enhance shareholder value.” Last week, Bed Bath & Beyond gave a fourth-quarter update in which Tritton warned of “short-term pain” in its efforts to stabilize its business.
1-800-Flowers, which owns a variety of gift brands, including Harry & David, Moose Munch, The Popcorn Factory, Wolferman’s, Cheryl’s Cookies and more, has been steadily expanding its portfolio. Last summer, it was the successful bidder at an auction for bankrupt Shari’s Berries.
“PersonalizationMall’s extensive product offering and industry-leading personalization capabilities will be an excellent addition to our growing family of popular gifting brands,” said Chris McCann, CEO, 1-800-Flowers. “The broad assortment of customizable products and processes that have made PersonalizationMall.com a premier provider of keepsake items will help us further our company’s vision to inspire more human expression, connection and celebration while enhancing our position as the leading one-stop destination for all our customers’ celebratory and gifting occasions.”
McCann noted that personalizationMall.com has achieved steady financial growth for the past several years, with revenues reaching more than $150 million in its most recent year.
“We expect PersonalizationMall.com to be accretive to our top and bottom-line results in fiscal 2021,” he said.
PersonalizationMall.com will continue to provide product and personalization services to Bed Bath & Beyond and buybuy Baby after the close of the sale.