Bed Bath & Beyond to close 150 underperforming stores as part of turnaround plan
Logo of Bed Bath and Beyond in South Edmonton Common. Friday, May 20, 2022, in Edmonton, Alberta, Canada. (Photo by Artur Widak/NurPhoto via Getty Images)
Bed Bath and Beyond said that it will lay off employees and close underperforming stores as part of a broader turnaround plan that was announced on Wednesday.
The struggling home goods retailer said it will cut about 20% of its workforce across corporate and supply chain, close 150 lower-producing stores and discontinue three of its nine Owned Brand labels – Haven, Wild Sage and Studio 3B. It will also significantly reduce the inventory of its remaining Owned Brands and bring back national brands including Calphalon, Ugg, Cuisinart, Dyson and Oxo.
Shares tumbled more than 20% on the news.
SNAP TO LAY OFF 20% OF EMPLOYEES AFTER REVENUE DECLINES
To drive traffic, sales, and customer retention, Bed Bath & Beyond will leverage its new Welcome Rewards program. Since its recent national launch, the Welcome Rewards program has seen strong momentum with 5 million total members, increasing new membership by 20%, according to the company.
Additionally, Bed Bath & Beyond has identified several strategies to accelerate the growth of its Buybuy Baby brand, including building on its digital and registry platforms, addressing additional age groups and expanding products and services.
Bed Bath & Beyond interim CEO Sue Gove said that the company is "embracing a straight-forward, back-to-basics philosophy" that will help it regain "dominance as a preferred shopping destination."
"We believe these changes will have a widespread positive impact across customer experience, inventory assortment, supply chain execution and cost structure," she added. "The customer underpins our decisions, and we are committed to delivering what they want while driving growth, profitability, and financial returns."
The strategic update comes hours after Bed Bath & Beyond said in a regulatory filing that it could potentially launch an at-the- market offering for up to 12 million shares of its common stock. Bed Bath & Beyond intends to use the proceeds for several corporate purposes, including to repurchase or repay some of the company’s debt.
Bed Bath & Beyond also said it secured $500 million in new financing, including a newly expanded $1.13 billion asset-backed revolving credit facility and a new $375 million "first-in-last-out" facility.
Bed Bath & Beyond's actions are expected to reduce selling, general and administrative expenses by approximately $250 million in fiscal 2022. Additionally, the company anticipates $250 million in planned capital expenditures for fiscal 2022, compared to the previously disclosed forecast of $400 million.
Looking ahead, the retailer is forecasting second-quarter net sales of approximately $1.45 billion and a roughly 26% comparable sales decline compared with the second quarter of 2021.
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