Shares of US domestic merchandise retailer Bed Bath & Beyond surged close to 5 percent on Monday amid news of a sale-leaseback transaction for one of its properties. The deal, which the company made with Oak Street Real Estate Capital, netted the company $250 million in proceeds.
The deal is part of a new strategy implemented by the company's new CEO, Mark Tritton, who took over the position in November of last year. According to the executive, the deal is part of his wider strategy to unlock more valuable capital. Tritton explained that capital could be used towards building a stronger and more efficient foundation for the company's future revenue growth.
To establish this stronger foundation, the company stated that it would be investing heavily in its core business and its overall operational enhancement strategy. Part of the proceeds from the transaction will also be used to reduce its outstanding debt and share repurchases.
The transaction itself involved the selling of one of the company's properties and then leasing it back. In a press release published by the company this week, it was revealed that the commercial properties sold had an accumulated area of around 2.1 million square feet. This apparently included existing stores, office spaces, and one of the company's distribution centers.
The exact stores and offices that were sold were not outlined in the press release, but it likely is only a small portion of the company's roughly 1,500 locations worldwide. The latest property is likely not going to be the last one for the year as Bed Bath & Beyond stated that it is currently working with third-party financial advisors to help it review its real estate assets to find the best course of action to further optimize its asset base.
Despite being the CEO of the company for only a couple of months now, Tritton has wasted no time in trying to turnaround the embattled retail giant. Last month, the executive fire six senior executives during the holiday shopping season. This included the ousting of people in key roles such as the company's chief merchandising officer, digital officer, general counsel, chief administrative officer, and marketing officer.
Tritton still has a lot of work on his hands if he wants to bring the company back to being competitive. Prior to his taking its reigns, Bed Bath & Beyond has struggled to compete with rapidly expanding rivals such as Amazon, Target, and Walmart. The aforementioned companies have managed to dominate the market thanks to their strong online presence and fast shipping services.
