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 26% to $8.99 in premarket trading.
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 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 various strategies to unlock the brand’s full growth potential, including leveraging its digital platforms and expanding products and services.
“We are working quickly and diligently to strengthen our liquidity and secure our course for the future,” said Sue Gove, interim chief executive. “We’ve taken a thorough look at our business and today, we’re announcing immediate actions aimed at increasing customer loyalty, increasing traffic and regaining market share.”
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 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%.
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. 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
