He also made preparations to sell additional shares, a move that would dilute current shareholders and send the stock price tumbling. Shares fell more than 20% early Wednesday.
The announcements, including laying off about 20% of corporate and supply chain staff, were part of a strategic update just days after the end of the company’s latest quarter. The retail chain reported comparable sales fell 26% in the quarter ended Aug. 27, and its operations burned through about $325 million of its cash.
Bed Bath & Beyond said it secured more than $500 million in new financing, which includes extending an existing line of credit. The new lifeline for the company is led by JPMorgan Chase & Co. and Sixth Street Partners. The Wall Street Journal previously reported that the company was close to a new loan deal.
The retailer said its board had decided not to sell the buybuy Baby chain, which operated 135 stores as of May. The company had hired consultants to explore a possible sale of buybuy Baby. Overall, Bed Bath & Beyond had approximately 955 total stores as of May 28.
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The Union, NJ-based retail chain also filed a shelf registration form, the legal paperwork to sell stock relatively quickly when it determines market conditions are favorable. The company said it could sell up to 12 million shares of common stock and could use the proceeds to pay down some of its debt.
Shares of Bed Bath fell about 24% to about $9 early Wednesday. The stock, a favorite investment meme, had lost nearly half its value in the past two weeks. Its market capitalization has fallen below $1 billion in recent weeks, having not traded near those levels since the early months of the pandemic.
The home goods retailer, which ousted Mark Tritton as chief executive in June amid falling sales, said on Wednesday it plans to undo much of its merchandise and inventory strategy. Mr. Tritton, former target Corp.
executive, joined the company in 2019 and has sought to turn the retailer around by pushing deeper into private label brands among other initiatives. These brands, however, have not been well received by buyers and have been hampered by supply chain constraints related to the pandemic.
The company said it would discontinue a third of its brands and refocus on national brands. On Wednesday, it said the general manager and head of stores were leaving and their roles had been eliminated.
The company is being led on an interim basis by board member Sue Gove, a former retail executive and retail restructuring consultant. It said it has retained search firm Russell Reynolds to find a permanent CEO and that the search process is ongoing.
Bed Bath & Beyond said the restructuring moves announced are expected to reduce costs by about $250 million in the current fiscal year. It also lowered its full-year capital spending forecast by $150 million.
The company, famous for its stores that carry a wide variety of home goods and 20% coupons, has struggled for years with falling sales and more recently with shrinking cash. It ended in May with about $100 million in cash.
The retailer was dealt another blow when billionaire activist Ryan Cohen sold his 10% stake in the company, about six months after acquiring his shares. The company’s stock, which had rallied in previous weeks, fell after private investors followed Mr. Cohen’s selloff.
The company plans to announce its full financial results for the second quarter on September 29.
Last week, S&P Global Ratings downgraded the company deeper to junk and gave a negative outlook, indicating it could downgrade again in the near future.
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