Bed Bath & Beyond Announces Strategic Plan To Restructure, Shares Plunge

Bed Bath & Beyond Inc BBBY has come out with a strategic and business update to drive growth and profitability and improve its balance sheet and cash flows.

The company has secured financing commitments for more than $500 million of new financing, which includes a newly expanded $1.13 billion asset-backed revolving credit facility (ABL) and a $375 million first-in-last-out facility (FILO).

Bed Bath & Beyond’s cost optimization plans include a reduction in force, including approximately 20% across corporate and supply chains. 

The actions are expected to cut selling, general and administrative expenses by $250 million.

It has reduced FY22 capital spending to $250 million from $400 million.

The company has identified and commenced the closure of approximately 150 lower-producing Bed Bath & Beyond banner stores.

Bed Bath has eliminated the Chief Operating Officer and Chief Stores Officer roles and said it is in the earliest phase of the search process for a CEO.

Outlook: BBBY sees Q2 sales of $1.45 billion against the consensus estimate of $1.5 billion. It expects a Q2 comparable sales decline of 20% and sees a free cash flow usage of approximately $(325) million.

Bed Bath is reeling under severe debt, and its shares tanked after billionaire investor and GameStop Chairman Ryan Chen exited his position.

“We have taken a thorough look at our business, and today, we are announcing immediate actions aimed to increase customer engagement, drive traffic, and recapture market share,” said interim CEO Sue Gove.

Price Action: BBBY shares are trading lower by 31.10% at $8.34 in premarket on the last check Wednesday.

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