Bed Bath & Beyond Inc.'s new chief executive, Mark Tritton, laid out his vision for remaking the troubled retailer. Decluttering stores is high on his list.
The former Target Corp. executive has spent the first 100 days on the job thinking about how many different types of can openers the retailer should stock. After the chain cut the number of options from more than a dozen to about three, sales rose.
The big takeaway: Selling too many items in stores that are overcrowded leads to "purchase paralysis," Mr. Tritton said Tuesday in an interview.
He joined the struggling company in November after its top officials, including the founders, were ousted by an activist investor. Mr. Tritton plans to trim inventory by more than 10% this year, part of a broader plan that also calls for spending as much as $400 million on store remodels, technology upgrades and supply-chain improvements.
Other changes include wider aisles and no more piles of merchandise up to the ceiling. Checkout lines flow through more of an organized queue, making them move faster. And while he has no plans to eliminate the coupons the retailer is known for, he does want to simplify pricing by doing away with overlapping promotions and use more signs to better explain deals.
"Customers don't want to do the math," Mr. Tritton said, adding that a lack of price clarity was a big reason shoppers left Bed Bath & Beyond stores empty-handed.
Mr. Tritton plans to take the new look to 25 stores this year. The company operates about 1,000 of its namesake stores and owns the BuyBuy Baby and Christmas Tree Shops chains. He also plans basic investments in the supply chain to reduce the number of items that are out of stock, which proved a big drag on sales in the second half of last year, he said. And he wants to upgrade the website.
Investors might be forgiven for wondering whether Mr. Tritton's plan is different enough from previous management, which was constantly tinkering with stores and spent more than $325 million in the previous fiscal year on technology and shop remodels.
Mr. Tritton said the previous approach was too scattered and didn't tie into a bigger strategic picture. "There were 45 objectives that weren't amounting to anything meaningful," he said. "This is an entire reworking of the store experience."
Those looking for a quick fix will likely be disappointed.
Bed Bath & Beyond swung to a $38.6 million loss in the three months that ended Nov. 30, from a $24.4 million profit a year ago. Sales fell 9% to $2.8 billion. It also withdrew its financial guidance for the full year.
On Feb. 12, the company's shares plunged more than 20%, after it reported a decline in sales and profit margins for December and January. It is scheduled to report results for the full quarter, which includes March, on April 15. Over the past year, the stock is down about 30%.
The company is so behind on some basic functions that its stores don't have Wi-Fi, meaning that shoppers can't easily check prices online while they shop. They also don't offer the option of buying online and picking items up in store, a service provided by most large chains.
Mr. Tritton said he plans to have both Wi-Fi and the buy online pickup service available in all stores by year-end. Along the way, he wants to add more private brands, which have bigger margins and can help the chain differentiate itself from rivals. Mr. Tritton said he developed over 35 private brands for Target, while serving as that chain's chief merchandising officer.
Unlike other troubled retailers, Bed Bath & Beyond has money, including about $900 million in cash and cash equivalents as of Nov. 30. In January it reached a deal to sell and lease-back some of its real estate for $250 million in proceeds.
The company also plans to spend about $600 million this fiscal year on share repurchases and debt reduction.
On Tuesday, the company said it would sell a subsidiary that personalizes products to 1-800-Flowers.com Inc. for $252 million. Mr. Tritton said he is continuing to evaluate other noncore businesses that might be sold as well as the possibility of future staff reductions and store closures.
"We are making substantial moves," Mr. Tritton said. "But we are early in our turnaround. This is phase one."
