It also prepared to sell additional shares, a move that would dilute current shareholders and send the stock price plummeting. Shares fell more than 20% early Wednesday.
The announcements, including the layoffs of approximately 20% of the company’s and supply chain employees, were part of a strategic update just days after the company’s most recent quarter ended. The retail chain reported that comparable sales fell 26% in the quarter ended Aug. 27 and its stores used about $325 million of its cash reserves.
Bed Bath & Beyond said it has secured more than $500 million in new financing, including an extension to an existing line of credit. The new lifeline for the company will be led by JPMorgan Chase & Co. and Sixth Street Partners. The Wall Street Journal previously reported that the company was on the verge of a new lending deal.
The retailer said its board has decided not to sell its Buybuy Baby chain, which operated 135 stores in May. The company hired consultants to review a possible sale of buybuy Baby. In all, as of May 28, Bed Bath & Beyond had a total of about 955 stores.
SHARE YOUR THOUGHTS
What is your opinion on Bed Bath & Beyond? Join the conversation below.
The Union, NJ,-based retail chain also filed a shelf registration form on Wednesday, the legal paperwork to sell stock relatively quickly if it determines that market conditions are favorable. The company said it could sell up to 12 million shares of its common stock and use the proceeds to pay off some of its debt.
Shares of Bed Bath are down about 24% to around $9 in early trading on Wednesday. The stock, a favorite among meme investors, had lost nearly half its value in the past two weeks. Its market cap has slipped below $1 billion in the past few weeks, not trading near that level since the early months of the pandemic.
The housewares retailer, which ousted Mark Tritton as chief executive in June amid a slump in sales, said on Wednesday it plans to roll back much of the merchandising and inventory strategy it has implemented. Mr. Tritton, a former Target Corp. executive, joined the company in 2019 and sought to transform the retailer by digging deeper into private label, among other initiatives. However, these brands have not been well received by buyers and have been hampered by pandemic-related supply chain restrictions.
The company said it would discontinue a third of its house brands and refocus on national brands. On Wednesday it announced that its Chief Operating Officer and Stores Chief are leaving the company and their roles have been axed.
The company will be led on an interim basis by board member Sue Gove, a former retail executive and consultant on retail restructuring. It said it has hired search firm Russell Reynolds to find a permanent CEO and that the search process is ongoing.
After years of declining sales, Bed Bath & Beyond is facing an existential crisis. WSJ’s Suzanne Kapner explains why the company has fallen on hard times and looks forward to what’s next for the veteran retailer. Photo illustration: Laura Kammermann/WSJ
Bed Bath & Beyond said the announced restructuring moves are expected to reduce spending by about $250 million in the current fiscal year. It also reduced its full-year capital expenditure guidance by $150 million.
The company, known for its well-stocked stores with a wide range of home goods and 20 percent coupons, has struggled for years with declining sales and, more recently, with a dwindling cash pile. It ended in May with about $100 million in cash reserves.
The retailer took another hit when billionaire activist Ryan Cohen sold his 10 percent stake in the company about six months after acquiring his stake. Shares of the company, which had rallied over the past few weeks, slid after individuals followed Mr. Cohen’s sell-off.
The company plans to release its full financial results for the second quarter on September 29th.
Last week, S&P Global Ratings cut the company’s credit rating deeper into junk territory and assigned a negative outlook, suggesting that the rating could be downgraded again in the near future.
write to Inti Pacheco at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8