Shares of Bed Bath & Beyond, Inc. (BBBY) were trading 29 percent down in pre-market activity on Nasdaq after the home improvement retailer Wednesday said it sees weak comparable sales in the second quarter and fiscal 2022.
Further, the company announced various cost cutting initiatives, which include 20 percent job reduction, plan to exit a third of its Owned Brands, and to close 150 lower-producing banner stores. These various measures would reduce SG&A by approximately $250 million in fiscal 2022.
For the second quarter, the company now expects net sales of approximately $1.45 billion and comparable sales decline of approximately 26 percent.
Further, for fiscal 2022, the company now expects comparable sales decline in the 20 percent range.
In its strategic and business update focused on changes, the company said it has begun implementing significant, additional SG&A reductions to right-size its cost structure. Cost optimization plans include a reduction in force, including approximately 20 percent across corporate and supply chain.
Further, it has identified and commenced the closure of approximately 150 lower-producing Bed Bath & Beyond banner stores.
Bed Bath & Beyond is working expeditiously to increase its National Brands inventory where possible and will increase inventory penetration by 20 percentage points over the long term.
Accordingly, it will be exiting a third of its Owned Brands by discontinuing three of its nine labels, such as Haven, Wild Sage and Studio 3B. The breadth and depth of inventory across the six remaining Owned Brands will be substantially reduced to 20 percentage points.
Bed Bath & Beyond has further reduced its plan for capital spending. In fiscal 2022, planned capital expenditures are now forecasted to be $250 million, compared to the $400 million previously disclosed.
It will host a supplier event in early-Fall 2022 to build on new and strengthen existing relationships, and address any issues.
Regarding buybuy BABY banner, Bed Bath & Beyond said the Strategy Committee has completed a comprehensive review, which confirmed the banner’s strategic potential as part of the company portfolio.
The company has eliminated the Chief Operating Officer and Chief Stores Officer roles. Accordingly, John Hartmann and Gregg Melnick will be departing the company.
Regarding the ongoing CEO Search, the company said it is in the earliest phase of the search process and will provide an update when appropriate.
In pre-market activity on the Nasdaq, the shares were losing around 29 percent to trade at $8.60.
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