Bed Bath & Beyond, once a leader in kitchenware and bedding, is in free fall. It is racing to win back customers and salvage its brand before the pressures of modern retailing cave in.
"The company has not kept pace with how the customer has evolved and how consumers shop today," interim CEO Mary Winston told analysts on a conference call Wednesday.
Bed Bath & Beyond reported sales at stores open at least a year sank 6.6% during its most recent quarter. Bed Bath & Beyond lost money last quarter, too.
"There needs to be a fundamental change in our approach," she said. Bed Bath & Beyond's stock has lost around 90% of its value over the past five years and is on the verge of slipping below $10 a share. On Thursday, shares fell to a 20-year low.
Winston, a former Family Dollar executive, is trying to stabilize Bed Bath & Beyond after years of struggling sales and a messy activist battle that led to the ouster of the retailer's veteran CEO in May. Bed Bath & Beyond has since settled with activist groups by overhauling its board of directors and agreeing to make changes to the company.
With the proxy fight behind it, Bed Bath & Beyond is focusing on finding a new CEO that can transform the retailer as competition grows.
The chain has fallen behind traditional retailers who have expanded their home goods presence and a new crop of direct-to-consumer online brands. Walmart, Target and Amazon have launched cheaper private label home brands, while Wayfair has invested heavily on advertisements to get customers familiar with its brand.
Despite efforts to lower prices, Bed Bath & Beyond is still around 10% more expensive than Amazon on similar items, according to a UBS pricing study this week of the two retailers.
Bed Bath & Beyond is also under pressure from discounters TJ Maxx and its HomeGoods arm.
Retail analysts remain skeptical. Bed Bath & Beyond "might be running out of time, and the company will need to continue investing in order to survive," Oliver Wintermantel, analyst at Evercore ISI, said in a research note to clients Thursday. "It is difficult for us to get excited" about the company.
The first task for the company: Close underperforming Bed Bath & Beyond stores and the array of stores it has under different names. Bed Bath & Beyond has nearly 1,000 US stores, as well as hundreds of World Market, Cost Plus, Buy Buy Baby and Harmon locations.
Bed Bath & Beyond is shuttering at least 40 Bed Bath stores this year and said Wednesday that it will likely close more.
At stores it plans to keep open, it will attempt to reduce clutter. Critics have said Bed Bath & Beyond stores are too messy, with merchandise stacked high to the ceilings.
"We need to give our customers a reason to keep shopping in our brick-and-mortar stores," Winston said Wednesday. "In order to do that, we must update and enhance store experience."
Company leaders are also betting on its "next-generation lab stores" to draw customers back.
Bed Bath & Beyond has remodeled more than 30 stores with different layouts that aim to give shoppers better views of the merchandise. It is testing new ideas in these "lab" stores that sell more home decor, food, and heath and beauty care than traditional stores.
Bed Bath & Beyond hopes it can take what's working in the stores and roll it out store-wide, Winston said.
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