Bed, Bath & Beyond (BBBY) shares slumped lower Wednesday after the home retail said it would repurchase $675 million worth of stock over the next three years while outlining an aggressive turnaround plan that includes store closures and supply chain investments.
Bed, Bath & Beyond said it will purchase $225 million in shares this year, as well as $150 million per year over the next three years as part of an accelerated shareholder return program. The retailer also said it will spend around $250 million on store remodeling over the same time frame, and an equal amount on 'reinventing' its supply chain.
The group said it sees free cash flows of between $500 million and $1 billion over the next three years, and low to mid single digit growth in comparable sales for its 2023 financial year. Sales for 2023 are expected to rise to around $1.5 billion, the company said.
"We have made tremendous progress this year to strengthen our financial position, focus our portfolio in core Home, Baby, Beauty & Wellness markets, rebuild our executive team, and launch a series of omnichannel services to win back customers," said CEO Mark Tritton. "We will build on these strong foundations with a three-year growth strategy that further elevates the shopping experience, modernizes our operations, and unlocks sales growth, margin expansion, increased cash flow and strong and sustainable total shareholder return."
"Our transformation is rooted in an omni-always, customer-inspired approach that will make it easy to feel at home with Bed Bath & Beyond," he added. "In doing so, we will deepen our relevance and connection with customers by helping them unlock the magic in every room."
Bed, Bath & Beyond shares were marked 11.4% lower in early trading following the investor update to change hands at $21.27 each, a move that would still leave the stock with a six-month gain of around 220%.
Earlier this month, Bed, Bath & Beyond posted surprise second quarter earnings that topped Wall Street forecasts thanks in part to an 89% surge in online sales.
Comparable store sales were solid, as well, rising 6% from last year and notching the first positive growth rate since the fourth quarter of the retailer's 2016 fiscal year.
Last month, Bed, Bath & Beyond named Scott Lindblom as chief technology officer to support what the company called its "digital-first, omni-always customer experience" amid a broader cost-cutting plan that ultimately places more emphasis on online sales during the extended coronavirus pandemic.