UNION, N.J.—Mattress Bathtub & Past executives are bullish on their progress in remodeling the specialty retailer and rebuilding its function as a frontrunner in house. They mentioned they’re heading in the right direction by way of digital initiatives, buyer acquisition and retention, a merchandise re-sort and operational enhancements, though the chain’s fourth quarter and full yr outcomes have been blended.
The corporate heralded its digital gross sales progress of 86% on the yr and a 3rd consecutive quarter of comparable gross sales and revenue progress, which was 4% for the full enterprise and 6% for the Mattress Bathtub & Past banner. Web earnings was $9 million within the quarter ended Feb. 27, 2021, in comparison with a lack of $65 million within the prior-year interval.
In his opening remarks to traders on Wednesday morning, CEO Mark Tritton famous that 2020 was a pivotal yr by which the retailer “reformed its previous, overcame extraordinary circumstances and rebuilt its authority in house.” He highlighted its a couple of billion on-line guests and an internet conversion charge of 30%.
He additionally mentioned the corporate has considerably improved its monetary place and streamlined its portfolio, noting that noncore asset gross sales “added additional cash to our battle chest.”
However outcomes have been hampered by a couple of elements, each exterior and inner, within the quarter.
Web gross sales of $2.6 billion have been down 16% in comparison with the prior yr interval, as a result of sale of sure nameplates, equivalent to Price Plus World Market, and everlasting retailer closures, which have been deliberate. Taking these elements out of the equation, core banner web gross sales decreased roughly 3%, primarily because of retailer closings. Complete retailer web gross sales decreased 27%, whereas whole digital web gross sales elevated 86%.
Gross margins additionally took successful as the corporate underwent an assortment reset as a part of a transition to extra owned manufacturers, mixed with important industry-wide freight value will increase. Gross margin of 31.5% decreased 110 foundation factors in comparison with the prior yr interval.
Chief Monetary Officer Gustavo Arnal advised traders the corporate sees enhancements in gross margins within the first quarter, which will probably be boosted by penetration of its owned manufacturers because the yr progresses. Three of eight deliberate owned manufacturers have both launched or are about to launch this spring.
“We’re divesting underperforming and low-margin merchandise and changing them with owned manufacturers with higher margin potential,” Tritton advised traders.
Arnal additionally mentioned that freight value will increase have been constructed into the corporate’s plans.
Talking to HFN after the investor name, Chief Working Officer John Hartmann mentioned the corporate was more than happy with enterprise total and that it’s persevering with its commitments made at its traders day final fall.
Its plan to shut 200 Mattress Bathtub & Past shops in 2020 and 2021 is 70% full, with the objective of delivering $100 million in EBIDTA enhancements. He famous that even with the shop closures, the retailer nonetheless addresses 80% of the U.S. market, a determine it maintained earlier than the shop closures.
“We’re more than happy with gross sales transference,” Hartmann mentioned. Clients of the closed shops went to different Mattress Bathtub & Past shops within the native market or shopped the corporate’s web site as a substitute, he mentioned.
The corporate can also be shifting forward with its retailer remodels (the plan is to finish 450 remodels over three years). Primarily based on a prototype retailer in Watchung, N.J., it lately accomplished seven rework assessments in Houston; 4 of which have been full renovations and three of which have been room resets.
Hartmann mentioned the transformed shops are rather more shoppable with open sightlines and improved signage. They’ve been “decluttered” and adjoining layouts and product adjacencies make extra sense. The racetrack format nonetheless exists in these Houston shops, nevertheless it has streamlined the circulate to scale back congestion. “It’s an entire new feel and appear,” he mentioned.
Early outcomes and buyer suggestions have been optimistic, Hartmann mentioned. “We’re testing and studying and can proceed to tweak it to get it excellent,” he mentioned.
The corporate is on monitor to open 130 to 150 newly transformed shops this yr in key markets throughout the nation. When requested whether or not there are any plans to open new shops, Hartmann, who can also be president of buybuyBaby, mentioned there are plans to open seven new buybuyBaby shops this yr however will take into account new Mattress Bathtub & Past shops sooner or later.
Concerning operations, Hartmann advised traders that within the fourth quarter, Mattress Bathtub & Past shops fulfilled 41% of whole digital gross sales. It transformed 30 shops into regional success facilities and is planning to open 4 regional distribution facilities, “a key first step in vastly bettering the shop replenishment charge.” It’s within the closing choice levels of a third-part logistics associate.