Bath & Beyond Stock Bedside Sinks. Cuts 20% of jobs and closes 150 stores.

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Bed Bath & Beyond

Shares fell on Wednesday after the troubled retailer said it was laying off a fifth of its workforce and closing more than a hundred stores.

In an effort to reduce its costs, Bed Bath (point:

BBBY

) plans to reduce its workforce by 20% across all operations and supply chain operations. The company will close about 150 lower-producing stores and exit a third of the brands it owns in an effort to shift toward national brands.

The first wave of closings will likely affect 50 to 60 stores, executives told a call analysts. Meanwhile, the company hopes to rebalance its inventory mix in favor of national brands over the next two quarters and plans to begin its rotation to national brands as soon as possible, in time for the holiday shopping season.

Executives expect cost-cutting strategies to reduce selling, general and administrative expenses by about $250 million in fiscal 2022. Capital spending will rise to $250 million for 2022, down from $400 million previously disclosed. .

Shares fell 24% to $9.15 on Wednesday.

The retailer also said it had secured commitments for more than $500 million in new financing, including a new $1.13 billion expanded revolving credit facility and a new $375 million first-in-last-out facility. The $500 million loan comes from JP Morgan and Sixth Street Partners.

The loan will allow Bed Bath & Beyond to bolster its balance sheet and buy the company time to implement a much-needed turnaround plan. The funding comes after Bed Bath burned through more than $300 million in cash in its first fiscal quarter. Reports of the Bed Bath loan have been circulating since last week, sending the stock price higher. Since the close of markets on August 24 – the date of the first loan report – shares have risen nearly 40%.

“We are committed to strengthening the financial corridor to execute the critical strategies required for our business,” said Sue Gove, interim chief executive. “We are creating sustainable improvements to our balance sheet and cash flow to deliver business returns.”

Gove has served as interim chief executive since late June when former chief Mark Tritton stepped down. On Wednesday, the board said Gove would continue to lead the company while the CEO search process continued.

The company also provided a much-anticipated update on its strategic review of its Buybuy Baby business, specifying that the vertical will deliver greater value to shareholders as part of the portfolio rather than as a stand-alone company. The Board has identified several strategies to unlock the brand’s full growth potential, including building on its digital platforms, expanding products and services, and attracting future generations of new parents.

In addition to the strategic update, Bed Bath announced Wednesday that it was preparing a market offering program for up to 12 million shares of common stock and would use the proceeds from the sale for general corporate purposes, including repaying its debt, future stock repurchases and financing acquisitions.

The retailer also updated its guidance for the second quarter. The company expects net sales of about $1.45 billion, below estimates of $1.52 billion, with comparable sales down 26% from the same quarter last year. The use of free cash flow will be about $325 million, the company said. For fiscal 2022, Bed Bath expects comparable sales to decline in the 20% range.

The company’s second-quarter earnings report is scheduled for September 29.

Write to Sabrina Escobar at sabrina.escobar@barrons.com