Bed Bath & Beyond has made progress in paying its suppliers following reports that vendors had restricted or stopped shipments due to delayed payments.
“Working with our supplier partners remains an important focus area and I'm pleased to share that our payables are considerably healthier than in the prior quarter as evidenced on our balance sheet,” interim CEO Sue Gove noted on a Thursday earnings call.
Some suppliers had restricted or stopped shipments after failing to receive timely payment from the company, Bloomberg reported last month. In some cases, vendors reported that more than half of their invoices were past due.
The company, which is in the midst of an expansive turnaround plan, secured $500 million in new financing late last month to shore up the struggling business and “obtain vendor and supplier financing,” according to an Aug. 31 filing. The home goods retailer also noted that some suppliers have requested or been granted more stringent payment terms, advanced payment of invoices and stand-by letters of credit.
Bed Bath & Beyond has had “regular communications and information sharing” with suppliers to improve transparency, Gove said Thursday. The company is holding its first vendor summit next month to “demonstrate consistent and proactive communication.”
Gove said the company is positioned to deliver on its merchandise and inventory overhaul plans thanks to its prioritization of vendor payments. Bed Bath & Beyond purchased merchandise from 4,600 suppliers in the fiscal year ending Feb. 26. The retailer’s ten largest suppliers accounted for approximately 23% of purchases, though the company does not have any long-term contracts with vendors.
Larger suppliers have been major partners in the company’s plans to improve its merchandise offerings, Gove said. Making improvements in its product assortment is key to the retailer's turnaround plan — sales from stores in Q2 plunged 26% YoY due to out-of-stocks and a legacy assortment portfolio that is out of touch with consumer trends, according to its earnings report.
“They want us to win and they are supporting our assortment changes that are going to create the best experiences for our customers,” Gove said.