Bed Bath & Beyond to cut jobs, close stores to reverse losses

Register now for FREE unlimited access to Reuters.com

Aug 31 (Reuters) – Bed Bath & Beyond Inc (BBBY.O) said Wednesday it has closed deals for more than $500 million in new financing and that it would close 150 stores, cut jobs and review its merchandising strategy in a attempting to get around his money-losing business.

Investors, however, remain concerned that the retailer’s plan, announced in a strategic update, will do little to improve Bed Bath & Beyond’s business as shares fell 25%. The retailer also announced a plan to raise money by issuing new shares.

The big-box chain — once considered a so-called “category killer” in home and bathroom goods — has seen its fortunes falter after attempting to sell more of its own brand or private label items. The COVID-19 pandemic, supply chain tightness and consumer relapse due to skyrocketing inflation have also hit the chain’s sales.

Register now for FREE unlimited access to Reuters.com

Bed Bath & Beyond forecast a more-than-expected 26% drop in same-store sales for the second quarter and said it would maintain its buybuy Baby business it had put up for sale.

Efforts to sell buybuy Baby were encouraged by GameStop Corp (GME.N) chairman Ryan Cohen, the company’s largest investor until this month when he sold his 9.8% stake, sending shares plummeting.

Once known for providing 20% ​​off coupons to many shoppers, Bed Bath & Beyond has revamped its merchandise in recent years to focus on private label products, including Our Table branded cookware. read more

The chain is now abandoning that strategy, replacing three of its private label brands and reprioritizing national brands with labels like Calphalon, Ugg, Dyson and Cuisinart supporting that strategy, executives said during a conference call.

Executives said Bed Bath & Beyond will cut approximately 20% of its workforce in the business and supply chain and eliminate the positions of Chief Operating Officer and Chief Store Officer. The company has approximately 32,000 employees.

Top Brass tried to reassure analysts that suppliers still supported the company, a key indicator of its long-term financial outlook. Suppliers will ask for more money up front or stop shipping goods if they think retailers can no longer afford them.

Signage on display at a Bed Bath & Beyond store in Manhattan, New York City, US, June 29, 2022. REUTERS/Andrew Kelly/File Photo

“While we’ve managed to save our money, we’ve seen changes in suppliers we manage,” Chief Financial Officer Gustavo Arnal said, adding that the company is managing the situation “one by one.”

First quarter sales fell 25% and lost $358 million, leading to the resignation of Chief Executive Officer Mark Tritton in June. The company hired Sue Gove, an independent director, to replace him on an interim basis.

On Wednesday, Gove said the retailer “continued to see significant positive momentum” and plans to build on its “deep heritage as a retailer.”

“While there is still a lot of work ahead of us, our roadmap is clear and we are confident that the significant changes we announced today will have a positive impact on our performance,” she said during a conference call.

The retailer also said it was expanding an existing loan and receiving a new loan of $375 million, and would launch an equity offering of up to 12 million shares.

Arnal said 50 to 60 stores will be closed in a “first wave” en route to Bed Bath & Beyond’s fiscal year balance, which ends in February. The company has about 900 stores.

“They are running out of money and desperately need money to keep the company going,” said Jim Dixon, stock sales trader at Mirabaud.

To improve its finances, the retailer said it would cut $250 million in sales, general and administrative expenses this year from last year and limit capital expenditures.

The company also estimates that comparable store sales will fall by 20% this year as it progresses through its transformation.

“We are generally pleased that the measures announced today … will ease the pressure on the company, allowing it to continue trading,” said Neil Saunders, GlobalData’s general manager.

Register now for FREE unlimited access to Reuters.com

Reporting by Uday Sampath and Deborah Sophia and Bansari Kamdar in Bengaluru; Additional reporting by Siddharth Cavale, Jessica DiNapoli and Arriana Mclymore in New York; Editing by Arun Koyyur and Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

Add a Comment

Your email address will not be published.