Bed Bath & Beyond will cut jobs and close stores in a bid to reverse losses

Bed Bath & Beyond will cut jobs and close stores in a bid to reverse losses
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August 31 (Reuters) – Bed Bath & Beyond Inc. (BBBY.O) He said Wednesday that he has signed deals for more than $500 million in new financing and would close 150 stores, cut jobs and revise his merchandising strategy in a bid to turn 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 as much as 26.5%. The retailer also announced a plan to raise money by issuing new shares.

The supermarket chain, once considered a “category killer” in home and bathroom items, has seen its fortunes tumble after a bid to sell more of its own brand or private label products. The COVID-19 pandemic, the supply chain crisis and consumers’ backsliding on purchases due to soaring inflation also affected the chain’s sales.

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Bed Bath & Beyond forecast a larger-than-expected 26% drop in same-store sales for the second quarter and said it would keep its baby-buying business, which it had put up for sale.

GameStop Corp encouraged efforts to sell buybuy Baby. (GME.N) Chairman Ryan Cohen, the company’s biggest investor until this month, when he sold his 9.8% stake, sending shares plunging.

Cohen’s exit followed a 300% rise in the value of his shares amid a speculative rally in meme stocks, a popular reference to stocks traded by investors that are based largely on social media hype. social rather than its economic foundations. read more

Given its current situation, VandaTrack, which tracks retail buying of shares, said it expected retail investor interest in Bed, Bath & Beyond to fade, but found that some investors have not given up on the stock altogether.

“Meme stocks typically require exponential growth in inflows to continue to rally in a bear market environment,” the firm said in a research note published Wednesday.


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

The chain is now abandoning that strategy, eliminating three of its private-label brands and prioritizing national brands with labels including Calphalon, Ugg, Dyson and Cuisinart that support that strategy, the executives said in a conference call.

Executives said Bed Bath & Beyond is cutting about 20% of its corporate and supply chain workforce, and eliminating its COO and store manager roles. The company has about 32,000 employees.

Signage is seen at a Bed Bath & Beyond store in Manhattan, New York, U.S., June 29, 2022. REUTERS/Andrew Kelly/File photo

Senior managers tried to reassure analysts that suppliers continued to support the company, a key indication of its long-term financial prospects. Suppliers will ask for more money up front or stop shipping products if they believe retailers can no longer afford them.

“As we have managed our cash burn, we have seen changes in the suppliers we manage,” CFO Gustavo Arnal said, adding that the company is handling the situation “one by one.”

First-quarter sales plunged 25% and lost $358 million, leading to the firing of its chief executive, Mark Tritton, in June. The company has hired Sue Gove, an independent director from the board, to replace him on an interim basis.

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

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

The retailer also said it extended an existing loan and received a new $375 million “first in, last out” loan, and would launch a stock offering of up to 12 million shares.

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

“They’re running out of cash and they desperately need to raise cash to keep the business going,” said Jim Dixon, Mirabaud’s equity sales trader.

To improve its finances, the retailer said it would reduce selling, general and administrative expenses by $250 million this year compared to last year and rein in capital spending.

The company also estimates that comparable store sales will drop 20% this year as it moves through its transformation.

“We are largely satisfied that the measures announced today … will relieve pressure on the company, allowing it to continue operating,” said Neil Saunders, CEO of GlobalData.

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

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

Our standards: The Thomson Reuters Trust Principles.

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