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The homewares retailer also forecast a bigger-than-expected 26% drop in same-store sales for the second quarter and said it would retain its buybuy Baby business, which it had previously put up for sale
Bed Bath & Beyond Inc shares plunged on Wednesday as the cash-strapped retailer announced a raft of measures, including store closures, job cuts and a stock offering to try and turn around its business.
The homewares retailer also forecast a bigger-than-expected 26% drop in same-store sales for the second quarter and said it would retain its buybuy Baby business, which it had previously put up for sale.
Bed Bath & Beyond estimated that comparable-store sales will drop 20% this year as it works through its transformation.
The company’s sales had plunged by 25% and it lost $358 million in its first quarter, 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.
In a conference call on Wednesday, Gove said the retailer was “continuing to see significant positive momentum” and intended to build its “deep heritage as a retailer,” Reuters reported.
“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 added, according to the newswire.
Under the new road map, Bed Bath & Beyond said it 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.
It has also decided to cut about 20% of its corporate and supply chain workforce and will eliminate its chief operating officer and chief stores officer roles. The company has about 32,000 employees, Reuters said.
Bed Bath & Beyond 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. 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.
In response, Bed Bath & Beyond shares sunk 27% to $9.08 in early New York trading.
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