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

Bed Bath & Beyond will cut jobs, close stores to reverse losses
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31 August (Reuters) – Bed Bath & Beyond Inc. (BBBY.O) On Wednesday, it said it had signed deals for more than $500 million in new financing and will close 150 stores, cut jobs and overhaul its merchandising strategy to reverse its money-losing business.

But investors are concerned that the retailer’s plan, announced in a strategic update, will do little to improve Bed Bath & Beyond’s business as its shares have dropped as much as 26.5%. The retailer also announced its plan to raise funds by issuing new shares.

The big box chain, once considered the so-called “category killer” in home and bathroom products, has seen its fortunes plummet after an attempt to sell more of its own brand or private-label products. Consumers’ withdrawal from shopping due to the COVID-19 pandemic, supply chain congestion and high inflation also hit the chain’s sales.

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Bed Bath & Beyond predicts a larger-than-expected 26% drop in same-store sales for the second quarter and said it will keep the Baby Buy Buy business it put up for sale.

Efforts to sell Buybuy Baby were encouraged by GameStop Corp. (GME.N) Chairman Ryan Cohen, the company’s largest investor, has downgraded its shares by selling 9.8% of its stake so far this month.

Cohen’s exit followed a 300% rise in stock value during a speculative rally in meme stocks, a popular reference to stocks that investors trade on social media hype rather than their economic fundamentals. Read more

VandaTrack, which tracks the retail purchase of the shares, found that, given the current stalemate, retail investors expect interest in Bed, Bath & Beyond to dwindle, but some investors haven’t given up on the stock entirely.

“Often, breast stocks require exponential growth in inflows to continue recovering in a bear market environment,” the firm said in a research note released Wednesday. Said.


Bed Bath & Beyond, once known for providing 20% ​​off coupons to many customers, has revamped its products in recent years to focus on private-label products, including Our Table brand cookware. Read more

Executives said in a conference call that the chain is currently abandoning this strategy, mixing three of its private label brands and re-prioritizing national brands with labels like Calphalon, Ugg, Dyson and Cuisinart.

Executives said Bed Bath & Beyond has cut nearly 20% of its corporate and supply chain workforce and eliminated the roles of chief operating officer and store chief. The company has approximately 32,000 employees.

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

Senior executives tried to reassure analysts that sellers were still supporting the company, a key indicator of their long-term financial prospects. If suppliers believe that retailers can no longer pay them, they will ask for more money upfront or stop shipping the goods.

“As we manage our cash flow, we have seen changes in the vendors we manage,” said Gustavo Arnal, Chief Financial Officer, adding that the company is managing the situation “individually”.

First-quarter sales fell 25% and lost $358 million, leading to the dismissal of Chief Executive Officer Mark Tritton in June. The company temporarily appointed Sue Gove, an independent board member, to replace her.

Gove on Wednesday said the retailer “continues to see significant positive momentum” and aims to build on its “deep legacy as a retailer”.

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

The retailer also said it was expanding its existing lending and taking out a new $375 million “first-in, last-out” loan and will launch a stock offering of up to 12 million.

Arnal said 50 to 60 stores will be closed in a “first wave” going into the balance of Bed Bath & Beyond’s fiscal year ending in February. The company has about 900 stores.

“They’re running out of cash and they desperately need to collect cash just to keep the business going,” said Jim Dixon, a stock sales trader at Mirabaud.

The retailer said it will cut sales, general and administrative expenses by $250 million this year and rein in capital expenditures to improve its finances.

The company also predicts comparable store sales will fall 20% this year as it works through the conversion process.

“We are overall satisfied that the measures announced today will ease the pressure on the company and allow it to continue trading,” said Neil Saunders, managing director of GlobalData.

Shares of the retailer closed the day down 19.8% at $9.71.

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

Our standards: Thomson Reuters Trust Principles.

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