Bed Bath & Beyond is a mess right now, the source says

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Bed Bath & Beyond might want to move some of those 65% off private label towels it’s currently selling to its New Jersey headquarters, because it looks like there’s a mess that needs cleaning up.

“The company is a fascinating show right now,” a source with direct knowledge of the drama unfolding at the one-time home goods retailer told Yahoo Finance.

Redundancies have begun to sweep the company as part of interim chief executive Sue Gove’s new plan to cut 20% of the workforce to conserve cash, the source said, and morale among workers is very low amid general confusion about with reference lines and the way forward.

“Sue has been on the board since 2019,” the source added, “she knew what was going on and she didn’t touch it.”

Bed Bath & Beyond outlined plans to issue more stock, close 150 stores and lay off 20% of its staff as the retailer tries to stem the bleeding from collapsing sales. The company also said it received commitments for an additional $500 million in financing, bringing its current liquidity to about $1 billion as the company tries to avoid the fate of Sears.

A pedestrian walks by a Bed Bath and Beyond store on October 3, 2019 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)

The retailer expects comparable sales to fall 26% from a year ago in the most recent quarter. For its 2022 financial year, the company expects corporate sales to fall 20%, with improvements in the decline in the second half of the year.

The buybuy BABY brand, for which activist investor and GameStop president Ryan Cohen has urged the company to explore alternatives, will remain within the Bed Bath & Beyond structure for now.

On the leadership side, the company said it will eliminate the COO and Chief Stores Officer roles instead creating new brand president roles to lead Bed Bath & Beyond and buy BABY, respectively.

Investors sent shares down 21% on Wednesday as they lost faith in Gove protecting the retailer from collapse in 2023.

A request to make Gove available for an interview on Yahoo Finance Live went unanswered by new communications chief Julie Strider.

“I’ve been in this business for 35 years in restructuring and turnaround, and unfortunately it’s a little too late,” restructuring expert and Macco CEO Drew McManigle told Yahoo Finance Live. “They should have started this process last year if they were paying attention to the post-pandemic numbers. I’m not going to be at all surprised if the Chapter 11 filings aren’t already filed or just waiting to be signed. I’m also not convinced that this $500 million in funding will be enough cash.”

McManigle added that in any case, “I’m not convinced, based on our experience, that it’s going to make any difference in the long run whether they file for Chapter 11 or not, because I honestly think that’s the only way they’re going to be able to restructure with hit $1.3 billion in debt and get out of a lot of real estate.”

Brian Sozzi is editor-in-chief and Anchor on Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and up LinkedIn.

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