Bed Bath & Beyond to cut jobs, close stores as it embarks on turnaround

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

(Reuters) -Bed Bath & Beyond Inc on Wednesday announced a raft of measures, including store closures, job cuts and a stock offering to turn around its cash-strapped business, sending it shares down 27.3% in premarket trading.

The retailer also forecast a bigger-than-expected 26% slump in same-store sales for the second quarter and said it would retain its buybuy Baby business, which it had put up for sale.

Once known for providing many shoppers with 20%-off coupons, Bed Bath & Beyond (NASDAQ:BBBY) overhauled its merchandise in recent years to focus on own-brand, or private-label, products including its Our Table brand cookware. But the retailer's strategy flopped, marred by supply chain issues and a pullback in spending on household products.

First-quarter sales plunged 25% and it lost $358 million, leading to the firing of its Chief Executive Officer Mark Tritton in June. The company hired Sue Gove, an independent board director, to replace him on an interim basis.

On Wednesday, Gove said the retailer was "continuing to see significant positive momentum" and intended to build its "deep heritage as a retailer."

"While there is much work ahead, our road map is clear and we're confident that the significant changes we've announced today will have a positive impact on our performance'" she said on a conference call.

Under that road map, the company will close 150 underperforming stores, ditch three of its nine owned brands, including Haven and Wild Sage, and reduce stocks in the remaining six labels to 20% of its total inventory.

Instead, the company will shift focus back to national brands, with firms including Calphalon, Ugg, Dyson and Cuisinart underpinning that strategy.

The retailer also shelved a plan to sell buybuy Baby, its infant and toddler merchandise business and decided to cut about 20% of its corporate and supply chain workforce. As part of this move, the company eliminated its chief operating officer and chief stores officer roles. The company has about 32,000 employees.

The retailer also said it has secured more than $500 million in new financing, including a new $375 million "first-in-last-out" loan, and would launch a stock offering of up to 12 million shares.

"They are running out of cash and desperately need to raise cash just to keep the business going," said Jim Dixon, equity sales trader at Mirabaud.

The retailer had a long-term debt of $1.38 billion and only $107.5 million in cash as of the end of May.

To improve its finances, the retailer said it would cut back on selling, general and administrative expenses by $250 million this year versus last year and rein in capital spending.

The company also estimates that comparable-store sales will drop 20% this year as it works through its transformation.

"We are broadly satisfied that the measures announced today ... will ease the pressure on the company, allowing it to continue trading," said Neil Saunders, GlobalData's managing director.