In a strategic update released Aug. 31, Bed Bath & Beyond shared plans to improve company performance, including staff reductions, additional executive changes and store closures.
The Union-based retailer’s shares dropped ahead of the update, after a filing with the Securities and Exchange Commission that same day that said it “may offer, issue and sell shares of our common stock from time to time.”
As of publication, stocks were trading down 9.29%.
According to Bed Bath, the strategic update is “focused on changes intended to meet the demand of its customers, drive growth and profitability, and improve its balance sheet and cash flows.”
Sue Gove, director and interim CEO said, “We are embracing a straight-forward, back-to-basics philosophy that focuses on better serving our customers, driving growth, and delivering business returns.”
Bed Bath has had a bumpy few months, including activist investor Ryan Cohen’s call for improved performance by the company in March as well as an executive shakeup in June. At that time, former CEO Mark Tritton was replaced by Gove, while Mara Sirhal succeeded Joe Hartsig as executive vice president and chief merchandising officer.
Bed Bath secured more than $500 million of new financing, including its expanded $1.13 billion asset-backed revolving credit facility and a $375 million “first-in-last-out” facility. On Sept. 1, the company announced the agreements were completed. The refinancing of the ABL Facility was led by J.P. Morgan; Sixth Street Partners is serving as the lender and agent for the FILO facility.
“We are pleased to announce this critical step in moving Bed Bath & Beyond in a positive direction by strengthening our financial positioning,” Gove said.
The company filed a Form S-3 Registration Statement with the SEC Wednesday as it prepares to launch an at-the-market offering program for up to 12 million shares of common stock. Bed Bath said it will use any proceeds for “corporate purposes,” including to repurchase or repay some of its debt.
Bed Bath said it launched “significant” additional SG&A reductions, including cutting about 20% of its workforce across corporate and supply chain staff.
These actions are expected to reduce SG&A by approximately $250 million in fiscal 2022.
The company also said it plans to further reduce capital spending to $250 million, compared to a previously disclosed $400 million figure.
Bed Bath said it started closing 150 lower-producing banner stores.
“The Company continues to evaluate its portfolio and leases, in addition to staffing, to ensure alignment with customer demand and go-forward strategy,” it added.
Bed Bath said customers will notice changes while shopping, including “bringing back popular national brands and introducing new, emerging direct-to-consumer brands.” It will also discontinue three of its private-label brands – Haven, Wild Sage and Studio 3B – and “substantially reduce” its remaining labels.
Bed Bath said it sees “strategic potential” in buybuy Baby and will continue to monitor its progress. This brand was a point of contention with Cohen earlier this year.
Sirhal, who stepped in as executive vice president and chief merchandising officer in June, was named executive vice president and brand president of Bed Bath & Beyond. Patty Wu, who has has served as senior vice president and general manager of buybuy BABY since joining the company in January 2021, was promoted to executive vice president and brand president of buybuy BABY.
In these new positions for the company, the brand presidents will be responsible for merchandising, planning and allocation, brand marketing, and stores. They will both report to Gove.
Bed Bath eliminated the chief operating officer and chief stores officer roles. Accordingly, John Hartmann and Gregg Melnick will leave the company.
The company also said it retained executive search and leadership advisory firm Russell Reynolds Associates in its efforts to hire a permanent CEO.
“We are working swiftly and diligently to strengthen our liquidity and secure our path for the future,” Gove said. “We have taken a thorough look at our business, and today, we are announcing immediate actions aimed to increase customer engagement, drive traffic, and recapture market share. This includes changing our merchandising and inventory strategy, which will be rooted in National Brands. Additionally, we are focused on driving digital and foot traffic, as well as optimizing our store fleet.”
Editor’s note: This story was updated at 9 a.m. ET Sept. 1 to include the closing of the financing agreements.