Fast Facts
- As its wraps up restricting its costs, Beyond Inc. plans to shift to a growth strategy.
- The Bed Bath & Beyond online continues to deliver the bulks of the company’s retail revenue.
- New store are in the works for Bed Bath & Beyond, Overstock and buybuy Baby through the company’s financial partnership with Kirkland’s Home.
- CapEx will be devoted to tech, improving the customer experience, and potentially acquiring IP that fits Beyond Inc.’s home-oriented portfolio.
Murray, Utah – Beyond Inc. is emerging from its restructuring phase after right-sizing its cost structure and is preparing to transition into growth mode.
Beyond –parent company of Bed Bath & Beyond, Overstock, buybuy Baby, and a blockchain asset portfolio – now has a handle on the levers it needs to pull to hit breakeven and begin generating a profit, according to executive chairman and principal executive officer Marcus Lemonis.
“We really feel this it the first quarter of a brand new business,” he told investors during Beyond’s Q1 review call this morning.
Although the company hasn’t fully completed the transition of e-commerce sites, “we know that road ahead seems to be filled with tons of green shoots,” he added.
Bed Bath & Beyond drives the business
Within the portfolio of e-comm brands, Bed Bath & Beyond still accounts for most of the company’s retail revenue, execs said, although the percentage wasn’t specified. (Net revenue for the company fell 39.4% to $232 million for the quarter ended March 31.)
The Bed Bath platform has cut more than 8 million skus and is still in the process of weeding out vendors as well as products that don’t meet margin expectations. However, in another 60 days or so, the company expects to begin adding new products and categories while it continues to build on the brand’s core categories of kitchen, bedding and bath.
It has also found the sweet spot for furniture, patio and rugs within the Bed Bath assortment.
“I wouldn’t have imagined years ago that Bed Bath & Beyond would become a very large furniture retailer,” said Lemonis.
Brick & mortar strategy now includes Overstock, buybuy Baby
Kirkland’s Home, through its investment partnership with Beyond Inc., is preparing to begin transform “a number of its locations” to Beyond Inc.’s retailer banners, Lemonis said.
The formats will include at least four Overstock stores, one pilot buybuy Baby store and an unspecified number of stores that will be branded as “Bed Bath & Beyond Home.”
The Overstock stores will be geographically placed so that the vendors can ship easily to them and customers can return products in a more efficient manner, Lemonis said. He did not elaborate further.
The Bed Bath & Beyond Home stores will more closely resemble Kirkland’s than the legacy Bed Bath superstore concept. The format will incorporate categories that have proven traction on bedbathandbeyond.com, including small furniture pieces, textiles and décor. Potentially, the stores could carry some merchandise from Overstock.com. And Lemonis sees the possibility that Kirkland’s banner stores might pick up some of the Bed Bath assortment as well.
The cross-merchandising strategy “starts to level the playing field and starts to make the Bed Bath stores and the Kirkland’s stores real players in the off-price, highly curated, well-merchandised, non-dumpster-looking environment that we believe customers are looking for,” Lemonis explained.
Cap Ex focuses on the fundamentals
While Kirkland’s is refining the brick & mortar strategy, Beyond Inc. will invest its capital in non-store initiatives.
“We want our dollars to be [spent] on technology, investing in the customer experience, figuring out how to exploit and get more out of our blockchain assets, and look to acquire other valuable IP in the same family and home space to that we can then take those brands to our investment vehicle of Kirkland’s and see those brands come to life,” Lemonis explained.
Beyond Inc. is on the brink of growth mode – at least on a quarter-over-quarter basis, he said. The company is striving to grow top-line on that basis during the second and third quarters.
On the bottom line, margin rate was 25.1% in the first quarter and Lemonis projected it will fall in the 24% to 26% range during the second and third quarter. The ultimate goal is to hit 27% margin with marketing expense at 13%. (Marketing expense came in at 13.5% in Q1.)
“I don’t expect gross margin percentage to continue to accelerate for a while,” he added, noting the impact of tariffs on consumer sentiment. “We’re dealing with a terrible economy today.”