Bed Bath & Beyond, Inc. (BBBY - Free Report) revealed plans to reopen stores in late May in a phased manner, keeping in mind the local and state regulations. On Apr 24, the company’s store closures were extended across the United States and Canada till May 16, except for buybuy BABY and Harmon Face Values stores that remained open to provide essential items.
As a result, the company was operating online through Buy-Online-Pick-Up-In-Store (BOPIS) and contactless curbside delivery options available in few locations across the United States and Canada. Going ahead, management has decided to expand these omnichannel services to 200 more locations. This is likely to bring the total number of locations offering such services to roughly 750 stores, which is nearly 50% of the company’s total stores in North America. Moreover, this expansion plan will allow the company to ship products online in less than two days or make pick-up available in less than two hours.
This move is in response to the rising demand for its products in the digital space. In addition, the company’s four e-commerce fulfillment centers remain operational. In a bid to expedite the delivery process and assign orders locally, it has converted roughly 25% of Bed Bath & Beyond and buybuy BABY stores in the United States and Canada into regional fulfillment centers. This has almost doubled its digital fulfillment capacity to cater to the rising digital sales. Notably, digital sales have surged more than 85% in April (as of Apr 25).
Coming back to store reopenings, the company plans to resume retail operations by May 22 beginning with nearly 20 stores. That said, it foresees most of its retail stores to remain shut till May 30. Keeping in these lines, furlough of store associates and certain corporate associates will also remain valid till May 30. However, the company will provide full cost of healthcare premiums to all furloughed employees until further notice.
Alongside this, management remains committed to safeguarding employees and customers. Consequently, it has introduced a new Store Safety plan for stores, which are about to open at the end of May. This plan will help it enforce and maintain safety protocols in stores and provide a safe environment for shoppers.
Some other notable actions taken in view of the COVID-19 outbreak include a reduction in salaries of the executive team by 30%. Meanwhile, the chairman of the board and independent directors will give up 30% of their quarterly cash compensations. Also, it has drawn down the remaining $236 million in its revolving credit facility. It is also reducing expenses by lowering inventory levels and extending payment terms for goods and services, among other initiatives. Further, the company is deferring $150 million of planned non-essential capital expenditure and prioritizing $250 million of capital expenditure for investments in digital and Buy Online Pick-Up In-Store. It has also postponed its share repurchases, dividend payouts and debt reductions until further notice. Moreover, it has suspended store remodeling plans and anticipates adverse impacts on its first quarter and fiscal 2020 results. Currently, it refrained from providing any guidance for fiscal 2020.
The uncertainties regarding COVID-19 impacts have led this Zacks Rank #3 (Hold) stock to plunge 47.5% in the past three months compared with the industry’s decline of 17.3%.
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