Bed Bath & Beyond to close stores, lay off staff as part of turnaround plan

Dive Brief:

In announcing a plan to turnaround its business, Bed Bath & Beyond on Wednesday said it would lay off about 20% of its corporate and supply chain staff and close more than 150 stores. Current store openings and store remodels have paused, CFO Gustavo Arnal said on an investor call.
The troubled home retailer also secured $500 million in new financing, including its recently expanded $1.13 billion asset-backed revolving credit facility and a new $375 million “first-in-last-out” facility, according to a company press release. The ABL was led by J.P. Morgan and the FILO was led by Sixth Street Partners, which has worked with retailers like Designer Brands and J.C. Penney.
The retailer also announced Chief Operating Officer John Hartmann and Chief Stores Officer Gregg Melnick are exiting the company. The retailer has eliminated these roles.

Dive Insight:

Bed Bath & Beyond laid out a turnaround plan that included laying off staff, closing stores and shifting its focus away from the owned brands it had been pushing for the past couple of years.

Executives on Wednesday announced the company is refocusing its attention to national brands and is discontinuing three of its nine private labels — Haven, Wild Sage and Studio 3B. As part of the liquidation process, the company will leverage promotion and clearance, use third-party sellers and stores that are closing to push through inventory and cancel orders. For the remaining brands — Simply Essential, Nestwell, Our Table, Squared Away, H for Happy and Everhome — inventory will be reduced to 20 percentage points. At the same time, Bed Bath & Beyond said it would increase its national brand inventory penetration by 20 percentage points.

“Our customer has communicated clearly that national brands are a really important part of their shopping experience with us,” Mara Sirhal, executive vice president and brand president of Bed Bath & Beyond, said on the call.

Sirhal said the company would also be working with more DTC brands in the future. The retailer last year announced a partnership with DTC mattress brand Casper to open a branded shop-in-shop in Bed Bath & Beyond’s New York City flagship.

“In the home market, there are many DTC brands which bring their own compelling brand marketing and followers who know and want them but aren't widely available to shop,” Sirhal said. “Bed Bath & Beyond can make these brands attainable for customers, and we are just at the beginning of the DTC trend curve. We have an exciting opportunity to capture this emerging trend as it becomes a bigger and more important part of the home sector.”

Bed Bath & Beyond on Wednesday also announced it would not sell its BuyBuy Baby banner after completing a review of the business. The company outlined strategies aimed at growing that banner, including building on its digital and registry platforms, addressing additional age groups and expanding its products and services. This follows calls to sell the banner, including from activist investor Ryan Cohen who has since exited his stake in the company.

In addition to it securing $500 million in new financing, the company also disclosed it is planning to sell additional shares — up to 12 million shares of common stock — and use the proceeds to pay down some of its debt.

Executives provided preliminary results for Bed Bath & Beyond’s second quarter: The company expects net sales to be $1.45 billion and for its comparable sales to decline by 26% year over year. The company also expects free cash flow usage of about $325 million. For the full year, its projects a comp sales decline of 20%, adjusted SG&A of $250 million and capital expenditures of $250 million versus its originally planned $400 million.