NEW YORK – Bed Bath & Beyond said Wednesday it will close stores and lay off employees in an effort to turn around its business.
Sue Grove, director and interim CEO, called move a “back to basics” philosophy that will allow the company to focus on better serving customers and driving growth.
The Union, New Jersey-based home goods retailer said it will close about 150 named stores and cut its workforce by 20%. It is estimated that the cuts will save $250 million in the company’s current fiscal year. It also said it is considering selling more of its stock to finance its finances and has lined up more than $500 million in new financing. When asked which locations would close, a Bed Bath & Beyond spokesperson told Nexstar that it would share information “when available.”
But it will keep its Baby buybuy chain, which earlier this year considered selling.
“We have taken a thorough look at our business, and today, we are announcing immediate actions aimed to increase customer engagement, drive traffic, and capture market share,” said Grove. “This includes changing our merchandising and inventory strategy, which will be based on the National Brand. In addition, we are focusing on driving digital and foot traffic, as well as optimizing our store fleet. We believe that these changes will have a widespread positive impact on the customer experience , inventory variety, supply chain implementation and cost structure.
Shares of Bed Bath & Beyond fell more than 21% on Wednesday and are down 65% in the last 12 months.
At the end of June, a report from Bank of America analysts claimed that, among other trends, the company allegedly turned off the air conditioning in stores to save money. Spokesman told Nexstar at the time that “no Bed Bath & Beyond store has been directed to adjust its air conditioning and there has been no change in company policy regarding utility use.”
Mired in a prolonged sales slump, the company also announced Wednesday that it will return to its original strategy of focusing on national brands, rather than pushing its own store labels. It reverses the strategy adopted by its former CEO Mark Tritton, who was overthrown in June after less than three years at the helm. It said it would eliminate a third of its store brands, which began rolling out last year.
“There’s still an incredible level of love for Bed Bath & Beyond,” Mara Sirhal, president of the newly named Bed Bath & Beyond brand, told industry analysts Wednesday. “We need to return to our rightful place as the destination of the home category, and our goal is to achieve this by leading with products and brands that our customers want.”
In May, the retailer operated a total of 955 stores, including 769 Bed Bath & Beyond stores, 135 Buybuy Baby stores and 51 stores with the name Harmon, Harmon Face Values or Face Values. As of February, it had about 32,000 employees.
Time is of the essence for companies heading into the critical holiday shopping season. It said it expected a 26% decline in comparable sales for its fiscal second quarter, which ended Saturday. It burned through $325 million in cash in the quarter.
Sirhal said the retailer wants to return to being a place where shoppers find innovative items. For example, Bed Bath & Beyond was the first to bring items such as air fryers and single-use coffee machines to customers, he said.
Neil Saunders, managing director at GlobalData Retail, said he applauds the strategic shift. But he said the task was “easier said than done” and required closer ties with suppliers to secure unique deals.
“If Bed Bath & Beyond simply provides the same items that can be found at Target, Walmart, or Amazon, then it will struggle to differentiate and will find its margins compressed because it has to match prices,” he said.
Bed BathBeyond has been facing a lot of turmoil these days. Its stock has risen from $5.77 to $23.08 in a little over two weeks in August, in a trade reminiscent of last year’s meme-stock crazeWhen companies out-of-favor suddenly become the darlings of small-pocketed investors.
But the stock fell back home after deep-pocketed investor, activist Ryan Cohen, billionaire co-founder of online pet products retailer Chewy Inc., sold all his stake in the company. In March, Cohen had bought a almost 10% stake in Bed Bath & Beyond, giving investors hope that he can turn the company’s finances around.
Shares ended Wednesday down $2.58 at $9.53.
The company said it is still looking for a permanent CEO. Board member Sue Gove took over as interim CEO, replacing Tritton. Chief Operating Office John Hartmann left the company, eliminating that position.
The Associated Press contributed to this report.
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