Shares of Bed Bath & Beyond Inc. (BBBY - Free Report) rose more than 5% at the close of the trading session on Sep 14, following the recruitment of Juan Guerrero for the role of senior vice president and chief supply chain officer. Effective immediately, Juan Guerrero will report directly to the chief operating officer and President of buybuy BABY on matters of transformation and optimization of the company’s supply-chain network. This move will help improve omni-channel capabilities, restructure and enhance supply-chain operations via launch of new brands, implement faster delivery options and optimize store network.
The company’s increased focus on supply-chain operations is a part of its latest restructuring program to combat declining margins due to consumers’ shift to the online platform and lower the cost of goods. Driven by the recent online boom, four e-commerce fulfillment centers remained operational to take advantage of consumers’ shifting preference amid this pandemic. Further, it converted roughly 25% of Bed Bath & Beyond and buybuy BABY stores in the United States and Canada into regional fulfillment centers to expedite the delivery process and assign orders locally. Also, the company launched Buy-Online-Pick-Up-In-Store or BOPIS and Curbside Pickup services, which remain key growth drivers, particularly for its buybuy BABY banner.
Driven by these endeavors, Bed Bath & Beyond has been witnessing strong online demand, which has continued even after the stores reopened. Encouragingly, the company increased digital marketing spend to boost traffic in its revamped website. In addition to this, the mobile app has been doing well, with more than 500,000 downloads from Apple and Google Play stores.
Apart from these, management is undertaking cost-cutting initiatives by reducing the workforce, closing underperforming stores and outsourcing several functions. Consequently, the company announced to cut nearly 5% of its total positions, which is likely to result in nearly $150 million of reduction in annual SG&A expenses. This will, in turn, aid the strategic realignment for improved focus on core business and initiatives to enhance customer experience, boost sales and drive long-term success.
However, the company is still reeling under the COVID-19 situation that led to a huge sales loss stemming from temporary store closures and lower margins due to shifting of consumers’ preference to the digital platform. We hope that the solid online show, cost-cutting efforts and increased focus on supply-chain operations are likely to help the stock overcome the COVID-19-related hurdles.
In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 31.6%, outperforming the industry’s growth of 10.9%.
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