Mark Tritton, Bed Bath & Beyond CEO and president, joins Yahoo Finance to discuss the company’s turnaround efforts and outlook for the future.
BRIAN SOZZI: Bed, Bath and Beyond report another quarter of progress in its turnaround this week. Same store sales rose for the third straight quarter, and earnings handily beat analyst estimates. Yet, Bed, Bath stock was hit on the company's outlook. On the week, shares were down about 18%, bringing the year to date gain in the stock to 38%.
Bed, Bath and Beyond president and CEO Mark Tritton is here with us now to talk more about the company's outlook. Mark, always good to see you here. You know, there's a lot going on inside the company. I don't have to tell you that. Is one of the takeaways for investors is that the turnaround in the company, it won't be in a straight line?
MARK TRITTON: Look, I think it will be in a straight line, but patience is required. I mean, we've just come out of a COVID moment. We've gone from four years of sales declines and performance to growth. And we're seeing consistent performance in our business. And we're exactly where we believe we should be and poised for a strong 2021. I think there's just impatience around us getting there faster. And I think that we look forward to coming out in Q1 and sharing our results. And again, providing another consistent quarter of growth and performance against our estimates.
BRIAN SOZZI: To that point, Mark, consumers have been out there spending very aggressively in the past few weeks, a lot of stimulus checks going through at retailers. Have you seen that in your business?
MARK TRITTON: We've seen overall growth that's very, very strong. I mean, we saw the results yesterday for March come out at about 10% growth rate, dramatically exceeding that growth rate in the month of March. So we see good things lie ahead for the quarter. We're seeing general consumer confidence is strong. And that's strengthening both in digital formats, as well as store formats in that true omni [INAUDIBLE] shopping experience. So I think that the COVID moment is still omnipresent in customers' minds, but confidence factors have changed definitely.
MYLES UDLAND: And Mark, it's Myles here. And I know we've discussed this previously. Certainly the stores, you know, when I go into to my local Bed and Barth's, they're a lot cleaner. They're not as cluttered as they were maybe three or five years ago. Are you guys having any supply issues, though, with things that you'd like to have in stock that you can't get because of issues? We hear that from a lot of industries. And I'm curious if it's impacting any of your mix.
MARK TRITTON: You know, we're actually doing really well on the recovery of [INAUDIBLE] stocks. They're down to their lowest point in over 18 months. So we feel really good. We did curate the assortment, Myles, down and actually create that focus in stores with new signage and new presentation and new flow. That's really paying dividends as we take each room and category and reset them sequentially in stores.
So we're seeing some level of change in the inventory and the placement as we get settled in to bring in our new own brands. We'll see that really stabilize through Q1, but no major supply issues at this point. And in terms of our own brand launches, we brought in that product ahead of time in the right quantities to make sure that that setup was on point. A few areas where port delays are affecting a few items, but in general, we're looking good.
BRIAN SOZZI: Mark, how much of inventory have you pulled out of the stores? I know you've been actively just reassessing what a Bed, Bath and Beyond store should look like. And when I walk in there, perhaps there's categories that no longer make any sense to have in the store.
MARK TRITTON: Yeah, we're actually reducing inventory in stores by about 20% to 30%. Now the flip side of that is the customers are coming in the store, particularly where we've remodeled, and saying, wow, you have more assortment than ever. And so, I think it creates focus, it creates the ability for the great merchandise to breathe. We're able to resonate clarity on value and our unique offers and to differentiate [INAUDIBLE] with our brand. So, definitely curating, definitely reassorting, definitely upgrading our assortment, all those things are taking hold as we speak.
MYLES UDLAND: And then, along with that assortment, Mark, certainly stay-at-home trades have influenced what people have been purchasing. I mean, when we've talked about your company on the show, I've heard from a lot of folks who are spending a lot more money on coffee in their house. And when I go into a Bed and Bath, that's a very robust section of the store these days. How has the mix changed in the store? And do you see things starting to shift as life maybe normalizes and people aren't home seven days a week anymore?
MARK TRITTON: You know, we're actually seeing a solidification of those trends. And I think these are-- you know, I've been using the quote, we've seen a moment that's now become a muscle. I think that customers do enjoy having that cup of coffee at home and the value that it brings. They've got the great coffee maker. And we're seeing that continue through. We're seeing customers really stay in love with their home for comfort, for safety, for style.
And so we see the discretionary side of the business really continuing with strength as part of people's lives and their modus operandi, whether it's inside the house or now moving to the backyard. So we see a strengthening of that trend. Everything we've seen in trend reports and NPD shows is that that part of the market will remain buoyant. We think we've got new offers and new assortment and new storytelling throughout the year that will only fortify that.
BRIAN SOZZI: Mark, a lot of focus after the earnings call on how many stores you're looking to prune. So, so far over your store closing campaign, you've closed 140, look to have 200 total closed as part of this campaign by the end of the year. Is this just the first round?
MARK TRITTON: No, it's the major round. I think, Brian, we've done an assessment using data and an SI group to really assess not just what we needed to do to take out underperforming stores or where we had duplication in an existing market, but really looking at a three to five-year horizon of growth and demographic growth, population growth, and seeing how we would also digitally fulfill orders for our customers across the nation. So, this is a bold move to really restructure those approximately 200 stores based on that long-term criteria.
But we'll always remain open to tweaking that, where we see performance improve or slow. That's actually part of our criteria. But I think this is the major thrust. And it's not a series of major changes over time.
MYLES UDLAND: And Mark, finally, I want to ask about the stock, but about the end of January and beginning of February. You guys kind of got caught up in that sort of meme market. The stock went from-- oh, I don't know-- somewhere around 20 to in the 50s. It certainly leveled out kind of at a more-- I don't know-- stable valuation, let's say. How did you guys think about that as a management company, if at all? I mean, again, it sort of came and went inside of a couple of weeks, but interesting to see those kind of-- those spikes on a longer term tract.
MARK TRITTON: Yeah, that was a roller coaster ride. I think for us, a couple of things. That's a great question, Myles. I think for us, we knew the reality of our financials and our stability. We were incredibly liquid. We had cash. We've already factored in our investments. We had our story out in the marketplace. The end result of that is, I think it made people actually look at Bed, Bath and Beyond again and go, hang on a minute. There is a strong story here, and this isn't like everybody else.
That peak was very, very sharp, as you can see. And then it faded very, very quickly. And so our goal as a company was to understand what was going on, but stay focused on our deliverables. So we didn't let it distract us. We stay focused on our prize. And you see that through our Q1 results and the reinforcement about 2021 guidance, which is in line with our plans and in line with our three-year plan. So, moment in time, not a distraction. Definitely an interesting time to live through.
BRIAN SOZZI: Yeah, that was quite a few weeks, but we'll leave it there. Bed, Bath and Beyond president and CEO, Mark Tritton, always good to see you. Good luck this quarter.
MARK TRITTON: Thanks, Brian and Myles.