Bed Bath & Beyond (BBB) has everything you need to play
"house" for real. It's the nation's #1 superstore domestics
retailer with more than 1,000 BBB stores throughout the US, Puerto
Rico, and Canada. The stores' floor-to-ceiling shelves stock
better-quality (brand-name and private-label) goods in two main
categories: domestics (bed linens, bathroom and kitchen items) and
home furnishings (cookware and cutlery, small household appliances,
picture frames, and more). BBB also operates 270 Cost Plus and
World Market stores, and three smaller specialty chains: about 80
Christmas Tree Shops; almost 100 buybuy BABY stores; and 50 Harmon
discount health and beauty shops.
Beyond its main BBB chain of about 1,020 stores, the retailer
operates 270 stores under the names World Market, Cost Plus World
Market, and World Market Stores banners. It also operates more than
95 buybuy BABY shops, almost 80 Christmas Tree Shops, and 50 stores
under the names Harmon and Harmon Face Values. In Mexico, BBB also
has a joint venture with Mexican retailer Home & More, where it
currently operates five stores under the BBB banner.
Sales of home furnishings generated 64% of the retailer's total
revenue in fiscal 2014 (ended February 2015), while domestic
merchandise made up 36% of total revenue during the year.
Nearly all of the New Jersey-based retailer's 1,500 stores are
in the US, though 44 of its stores are located across six Canadian
provinces while three inhabit Puerto Rico. Roughly one-third of the
company's stores are in five US states: California, Texas, Florida,
New York, and New Jersey.
Sales and Marketing
BBB likes to locate its stores in strip malls and power strip
shopping centers in suburban areas of medium and large-sized
cities. It also places its stores near major off-price and
The chain relies exclusively on circulars, mailings, and
word-of-mouth for advertising. BBB spent $308.4 million on
advertising in fiscal 2014 (ended February 2015), a sizable jump
compared with $280.5 million the prior year, and $250 million the
year before that.
BBB's sales have been steadily growing for each of the past few
years thanks to a strengthening US economy and increased business
stemming from its 2012 acquisitions of Cost Plus and Linen
BBB's sales grew by 3% to a record $11.88 billion in fiscal 2014
(ended February 2015), with approximately 71% of the sales increase
being driven by an increase in comparable store sales and the rest
coming from the company's new store sales. Comparable store sales
grew by 2.4% for the year (the same percentage as in FY2013) thanks
to higher transaction spending and transaction volumes. Comparable
sales through the company's customer website and mobile
applications grew by more than 50% for the year.
The retailer's profit declined for a second year despite higher
sales in FY2014, with net income falling by 6% to $957.47 million.
Most of the decline resulted from higher selling, general, and
administrative expenses related to technology costs (and related
depreciation) and increased advertising spending. BBB also incurred
roughly $49 million more in interest expenses as it issued more
long-term debt Notes in July 2014.
Cash from operations also shrank by 15% to $1.19 billion in FY2014
as the retailer generated less in earnings and slowed its
short-term borrowing cash inflows during the year from accounts
payable and merchandise credit and gift card liabilities.
BBB reiterated in 2015 that its strategy is to expand its market
reach either through strategic acquisitions or organically by
adding stores in both new and existing markets. To this end, the
retailer added 22 new stores in fiscal 2015 after opening 33 stores
the year before.
BBB also reiterated in 2015 that it wants to further enhance its
omnichannel capabilities through such initiatives as adding new
functionality to its e-commerce and mobile sites, and by opening
new distribution centers for both direct to consumer and store
fulfillment. Additionally, it planned to expand specialty
departments in its stores in areas such as health and beauty care,
baby specialty food, and specialty beverage sections.
The retailer's decentralized structure allows store managers to
have more control than their peers at other retailers (and the
company has less manager turnover). BBB cuts costs by locating its
stores in strip shopping centers, freestanding buildings, and
off-price malls, rather than in pricier regional malls. To cut
costs further, its vendors ship merchandise directly to the stores,
eliminating the expense of a central distribution center and
reducing warehousing costs.
Mergers and Acquisitions
In June 2012 the company bought Cost Plus, which
operates nearly 260 stores in 30 states under the World
Market, Cost Plus World Market, and Cost Plus Imports banners via a
successful tender offer. The acquisition followed an 18-month
partnership between the two chains, during which specialty food
departments were added to some BBB stores. BBB sought to boost foot
traffic and fend off online and discount retail competitors by
adding food and drink to its merchandise menu. (About 40% of Cost
Plus sales come from food and drink.)
Also in June 2012, the retailer acquired New Jersey-based Linen
Holdings, a privately-held distributor of bath, bed, and table
linens, for about $105 million. Linen Holdings' customers included
hotels, cruise lines, food service establishments, and health care