Bed Bath & Beyond announced Wednesday announced quick and important measures that it is taking to try to relaunch its struggling activity.
In a call with investors, the New Jersey retailer set out the details of its latest attempt at recovery. It said it has started closing about 150 of its “lower producing” namesake stores. They will also reduce costs by reducing the number of employees by about 20% across their corporate and supply chain workforce. To bolster its balance sheet, the company said it had secured over $500 million in new financing, including a loan.
The measures are urgently needed for the struggling retailer, which also revealed Wednesday that the slowdown in sales increased in the last quarter. Sales in the same stores fell by 26% for the three-month period ended August 27, an even greater decline than the declines in recent quarters.
Bed Bath’s shares closed down 21% at $9.53 Wednesday.
Its business had already taken many blows. The merchandise store said they lost hundreds of millions of dollars in sales because they didn’t have inventory to meet demand. It was publicly criticized by activist investor Ryan Cohen, who later sold off his entire stake in the company. Former CEO Mark Tritton, who was selected to come up with a successful strategy, was ousted by the board in June.
However, the company said that its new strategy can win back buyers who got lost to competitors.
“There is still an incredible degree of love for Bed Bath & Beyond,” said Mara Sirhal, the newly named brand president of Bed Bath & Beyond. “We must get back to our rightful place as the home category destination, and our goal is to achieve this by leading with the product and brands our customers want.”
Bed Bath burned it’s liquidity, ending in May with approximately $100 million compared to $1.1 billion a year earlier.
The company explained its has a plan Wednesday to reduce reduce costs and raise money. It secured a $375 million loan through Sixth Street Partners, a lender that has provided financing to other retailers including J.C. Penney and Designer Brands. It has expanded $1.13 billion asset-backed revolving credit facility, too.
It also disclosed in a filing that it will sell an undisclosed number of shares.
Along with the additional financing, it is slashing costs. Its store footprint will get about 16% smaller with the closures. As of late May, the company had 955 stores. That includes 769 namesake stores, 135 Buybuy Baby stores and 51 stores under its Harmon or Face Values brands.
Bed Bath also said it is eliminating the jobs of chief operating officer and chief stores officer.
To combat inventory concerns, Bed Bath will discontinue 3 of it’s private labels that confused consumers and will bring back more of the name brands that people recognize, such as Calphalon, Cuisinart and Oxo.
Bed Bath’s shares have been on an unpredictable roller-coaster ride for months, rocketing up to $30.06 and falling to a low of $4.38 in the past year. At Tuesday’s close of $12.11, stocks were down about 17% YTD.
Read the company’s news release here.
