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Bed Bath & Beyond (BBBY) Unveils Three Owned Brands, Rallies 62%

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Shares of Bed Bath & Beyond Inc. (BBBY - Free Report) skyrockets 62.1% on Jun 2 as it furthers its transformation plan, unveiling the launch of three more Owned Brands this quarter, just ahead of the Back-to-College shopping season. The launch forms part of the company’s key assortment expansion plan, with the objective of rebuilding its position in the $180-billion home market.

The product lines to be launched include Our Table, Wild Sage and Squared Away. The Our Table line will include modern cookware, bakeware, food prep, kitchen gadgets & utensils, kitchen linens, dining & barware products. The product line will comprise more than 1,100 products. Wild Sage is a youthful, eclectic collection of about 600 stylish housewares for the bedroom, bathroom, dining room and living space. Squared Away mainly includes storage, organization and cleaning solutions for the home. It offers nearly 300 storage items for the kitchen, closet, bathroom and organization throughout the home.

The latest product introductions will bring the company’s Owned Brands launches so far this year to six. Notably, it launched the Simply Essential, Haven and Nestwell Owned Brands last quarter. Simply Essential assortment line has been thoughtfully designed for meeting needs across every room of a house. It is the company's first full-line assortment at opening price points. Nestwell is an assortment line, including quality bed and bath goods. The Haven is a bath brand, which offers spa-inspired organic cotton products and more.

The launches indicate that the company is well ahead of its target of introducing at least eight Owned Brands by the end of February 2022. Moreover, the company earlier revealed plans to launch at least 10 Owned Brands in the next two years as part of its three-year transformation strategy.

Its transformation plan focuses on removing product redundancies and unproductive stock keeping units, store remodels and store closures. The company expects the Owned Brands to cater to the consumer needs across segments such as bed, bath, kitchen and dining, storage and organization, and home decor. It remains focused on launching several private-label brands, which are likely to contribute more than 60% to its revenues.

Moreover, management expects the sales penetration of Owned Brands to grow from 10% to 30% in the first three years. Further, the company expects to boost the gross margin by managing costs and sourcing. Another major step in its comprehensive growth strategy includes plans to launch thousands of products, exclusively available only at Bed Bath & Beyond.

The company is also on track with its three-year store optimization efforts. Management remains on track to close roughly 200 underperforming Bed Bath & Beyond stores by the end of fiscal 2021. As part of the program, it earlier expected nearly 15-20% of the sales lost from the stores to be transitioned to digital platforms. Also, it is progressing well with the store remodeling program, wherein proof-of-concept stores will showcase destination categories, bed, bath, kitchen, and storage products. The three-year plan will be executed on more than 450 stores, accounting for nearly 60% of its sales.

Further, the company intends to invest roughly $250 million to remodel nearly 450 stores over the next three years. Also, 130-150 stores are likely to be remodeled in fiscal 2021, with 26 stores in the fiscal first quarter.

Bed Bath & Beyond is focused on boosting consumers’ shopping experience by offering a wide range of home-related merchandise. Its moves to expand the Owned Brands assortment are likely to create substantial opportunities for long-term growth. This along with its store optimization efforts as well as digital and omni-channel expansion positions the company for growth in the future.
 

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Overall, shares of the Zacks Rank #3 (Hold) company have surged 54.2% in the past six months compared with the industry’s 8.5% growth.

Better-Ranked Retail Stocks to Consider

DICK’S Sporting Goods, Inc. (DKS - Free Report) currently sports a Zacks Rank #1 (Strong Buy). It has a long-term earnings growth rate of 7.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hibbett Sports, Inc. (HIBB - Free Report) , also a Zacks Rank #1 stock, has a long-term earnings growth rate of 8.5%.

Ulta Beauty Inc. (ULTA - Free Report) , with a Zacks Rank #1, has a long-term earnings growth rate of 16.5%.

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