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

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Aug 31 (Reuters) – Bed Bath & Beyond Inc (BBBY.O) On Wednesday, it announced it had signed deals for more than $500 million in new funding and would close 150 stores, cut jobs and revamp its merchandising strategy in a bid to turn around its loss-making 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 have fallen 25%. The retailer also announced a plan to raise funds by issuing new shares.

The big-box chain – once considered a so-called “category killer” in home and bath goods – has seen its fortunes falter after an attempt to sell more of its own or private label products. The COVID-19 pandemic, supply chain crisis and consumer pushback on purchases due to skyrocketing inflation also affected the chain’s sales.

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

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

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

The chain is now abandoning that strategy, forgoing three of its private labels and redefining national brand priorities with labels such as Calphalon, Ugg, Dyson and Cuisinart underpinning that strategy, executives said at a conference. telephone.

Executives said Bed Bath & Beyond was reducing about 20% of its corporate and supply chain workforce, and eliminating its chief operating officer and stores manager roles. The company has approximately 32,000 employees.

Senior brass tried to reassure analysts that suppliers were still backing the company, a key indication of its long-term financial prospects. Suppliers will ask for more money up front or stop shipping goods if they think retailers can no longer afford them.

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

“As we have managed our cash consumption, we have seen changes in the suppliers we manage,” said chief financial officer Gustavo Arnal, adding that the company is dealing with the situation “one by one”.

First-quarter sales fell 25% and the company lost $358 million, prompting the firing of CEO Mark Tritton in June. The company has hired Sue Gove, an independent director, to replace him on an interim basis.

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

“While there is a lot of work to do, 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 of a conference call.

The retailer also said it had extended an existing loan and received a new “first in, last out” loan of $375 million, 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” before Bed Bath & Beyond’s fiscal year balance, which ends in February. The company has approximately 900 stores.

“They’re cash-strapped and desperate to raise cash to keep the business running,” said Jim Dixon, equity trader at Mirabaud.

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

The company also estimates that same-store sales will drop 20% this year as it transforms.

“We are broadly satisfied that the measures announced today… will reduce pressure on the business, allowing it to continue operating,” said Neil Saunders, chief executive of GlobalData.

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

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