Bed Bath & Beyond, facing a comp store sales decline of 26% for the quarter that ended Aug. 27, 2022, has announced a combination of store closures and layoffs designed to reduce its SG&A (selling, general and administrative) expenses by $250 million in fiscal 2022. The retailer has begun shuttering 150 lower-producing Bed Bath & Beyond stores and plans to cut its workforce by approximately 20% across the corporate and supply chain divisions. As of May 28, 2022, the retailer operated a total of 955 stores, including 769 Bed Bath & Beyond locations.
Bed Bath & Beyond also issued an interim financial update for the second half of FY 2022 that forecasts a 20% comparable sales decline compared to the same period the previous fiscal year. The retailer also has cut capital expenditure plans down to approximately $250 million from its original $400 million budget for this period.
On the strategic front, the retailer is moving away from its private label strategy in favor of “popular national brands and new, emerging direct-to-consumer brands,” according to a statement. The retailer will discontinue three of its nine labels (Haven, Wild Sage and Studio 3B) and reduce the remaining labels to 20 percentage points of its inventory, “reflecting a more balanced sales to stock ratio moving forward.”
Bed Bath & Beyond, which secured a $375 million loan last week, has received additional financing commitments of more than $500 million and a newly expanded $1.13 billion asset-backed revolving credit facility. Additionally, the retailer is preparing to potentially sell up to 12 million shares of its common stock to raise additional cash.
The company has been struggling to right itself for several months. A 25% Q1 sales drop reported in late June 2022 coincided with the departure of CEO Mark Tritton. The retailer was rocked further in mid-August when activist board member Ryan Cohen threatened to sell his entire 11.8% stake in the company, a move that caused the company’s stock to tumble. Cohen had been pushing the retailer to sell its buybuy BABY division, which has been operating more profitably than the parent company.
However, the retailer’s Board has determined that buybuy BABY “will deliver greater value for the Company’s shareholders as part of the Bed Bath & Beyond Inc. portfolio.” The Board’s Strategy Committee will continue to monitor the business “as it preserves optionality and future value creation.
For now, Bed Bath & Beyond is trying to maximize its multi-banner business model. The retailer plans to leverage its recently introduced cross-banner Welcome Rewards loyalty program to drive traffic, sales and customer retention. The company reported that since the program’s national launch it has increased membership 20% to a total of 5 million members.
“We are embracing a straightforward, back-to-basics philosophy that focuses on better serving our customers, driving growth and delivering business returns,” said Interim CEO Sue Gove in a statement. “In a short period of time, we have made significant changes and instituted enablers across our entire enterprise to regain our dominance as a preferred shopping destination for our customers’ favorite brands and exciting products. We command a special presence in the Home and Baby markets, and we intend to fulfill our opportunity to be the category retailer of choice.”