Dive Brief:

• S&P Global this week revised Bed Bath & Beyond's outlook from negative to stable as a result of the company's "recent performance, improved credit metrics, and our expectations for continued stabilization in its core businesses," according to a press release emailed to Retail Dive.

• "The stable outlook reflects our expectation for [Bed Bath & Beyond] to execute on its key omnichannel and merchandise initiatives and drive generally stable operating performance next year, improving leverage to the mid-3x area at the end of 2021," wrote analysts Helena Song and Cameron Bybee. "We also expect the company to generate [free operating cash flow] and continue to reduce debt moderately in 2021."

• The analysts also said they were affirming all the retailer's ratings, including its B+ issuer credit rating.

Dive Insight:

Bed Bath & Beyond has been in turnaround mode for years, with efforts only accelerated by the appointment of CEO Mark Tritton at the end of 2019.

Since his arrival, Tritton has brought in a new C-suite, reduced the company's store footprint, sold off banners — like Christmas Tree Shops, PersonalizationMall.com and Cost Plus World Market — so focus can be on the retailer's core business and announced plans for several private label rollouts over the next year. And much of these initiatives took place during a global pandemic that has rattled most of the industry.

But for a retailer that has struggled for years, the circumstances brought on by the pandemic have helped buoy Bed Bath & Beyond. While retail broadly has continued to struggle, especially those selling in categories like apparel, the home sector has experienced a boom in sales due to consumers investing more in their spaces, someplace they've been forced to spend a majority of their time the past year.

Bed Bath & Beyond in its second quarter last year reported comps rose 6%, marking the first sales growth in that measure since the fourth quarter of fiscal 2016. The retailer continued its momentum into the third quarter, posting a 2% year-over-year comp sales increase. S&P analysts in its note pointed to Bed Bath & Beyond's continued omnichannel investments as being a key driver to its success, helping to push e-commerce sales to surge 77% in the quarter.

"We attribute the recent performance improvement to execution on key initiatives under its new management team, with focus on its core businesses and omnichannel investments while optimizing store fleet and merchandise," S&P analysts said. "In 2021, we project continued EBITDA margin expansion, benefitting from ongoing merchandise initiatives, cost cuts, and sales leverage in its core businesses," they continued.

Bed Bath & Beyond has continued to bring in fresh talent in recent months, with the appointments of Macy's vets Jim Reath to senior vice president of marketing and Mara Sirhal to senior vice president and general manager of the retailer's Harmon Health and Beauty stores, and Target vet Kristi Argyilan to senior vice president of brand innovation.