Bed Bath & Beyond Inc (NASDAQ: BBBY) shares dropped 20% after the home products retailer announced plans to slash 20% of its supply chain and corporate staff but reiterated that it would not sell its buybuy Baby division. The retail is also planning to close around 150 locations as it seeks to generate cash to turn around its operations.
Bed Bath & Beyond saw a drop in comp sales in the latest quarter
Additionally, the company indicated that it is preparing to sell more shares in a move expected to dilute existing shareholders. The revelations sent shares of the retail chain tumbling premarket. Interestingly the announcements come days after the conclusion of the company’s latest quarter, in which comp sales declined 26%, and operations burned around $325 million in cash reserves.
The company announced that it had obtained new funding of approximately $500 million, including an outstanding credit line augmentation. Sixth Street Partners and JPMorgan Chase & Co. are leading the fresh turnaround for the business. According to The Wall Street Journal, the company was reportedly close to a new credit agreement.
Earlier, the retailer had indicated that the board has resolved to sell the buybuy Baby division that, as of May, operated 135 outlets. As a result, bed Bath & Beyond sought the services of a consultant to look for a potential buyer for the division. As of May 28, 2022, the company had close to 955 locations.
Bed Bath & Beyond to sell 12 million shares
According to a shelf registration form filed by the company, it plans to sell shares whenever it deems favorable. The Union N.J-based company will sell around 12 million shares and uses proceeds to repay debt.
Bed Bath & Beyond, which ousted its CEO Mark Tritton in June following a sales slump, indicated that it would undo most of the inventory and merchandising strategy Tritton implemented. Tritton, who joined the retailer in 2019, had sought a turnaround by focusing more on private label brands and other initiatives.
Surprisingly, the brands he pushed into got negative reception from consumers and suffered from supply chain disruptions caused by the pandemic. As a result, the company now says it will discontinue around 30% of its house brands and concentrate on top brands.