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Bed Bath & Beyond announces more job cuts after worse than expected loss

By Nagasunder in US Employment News, posted January 11, 2023

Bed Bath & Beyond has announced more job cuts after a worse-than-predicted loss as people cut back on home improvements.

The firm has been losing money for months which has led to predictions of a potential bankruptcy.

Suppliers have sought payments more quickly and the pandemic-driven rise in demand for home decor has plummeted as the economy has weakened, which means the seller of household products has been suffering with a shrinking cash reserve.

Following years of declining revenue, Bed Bath & Beyond announced last week that the company was looking into its alternatives, including bankruptcy.

It obtained $375 million in financing in August but was unable to persuade bondholders to exchange their holdings for new debt this month.

The company announced last year that, among other cost-cutting measures, it will liquidate 150 stores and lay off 20 percent of its corporate and supply chain personnel.

On Tuesday, the business did not say if it would seek bankruptcy protection, but it did announce that it would be letting go of more workers to save costs.

It claimed cost reductions totaling between $80 million and $100 million had already begun.

Morningstar analyst Jaime Katz said she expects a bankruptcy filing in the first half of 2023, noting "the unwillingness of lenders to participate in a debt swap" as evidence they were unlikely to take on more risk.

Sources told Reuters the company has hired Jon Henes, a former restructuring lawyer at Kirkland & Ellis LLP, of C Street Advisory Group LLC to assist it in navigating options. C Street Advisory Group LLC is a corporate strategy and communications firm.

According to Reuters, Kirkland, investment bank Lazard Ltd., and turnaround and consulting firm AlixPartners LLP are also providing advice to Bed Bath & Beyond.

Bed Bath & Beyond did not take questions from analysts on its Tuesday conference call "in light of the ongoing review of strategic alternatives," said Susie Kim, head of investor relations.

Its shares increased 27.8 percent on Tuesday to settle at $2.07 as short-sellers covered their positions and retail investors speculated that the company would be an acquisition target..

The Union, New Jersey-based company's net loss for the third quarter of its fiscal year, which concluded on November 26, increased from $276.4 million to $393 million.

It contained an impairment charge of $100.7 million, suggesting that the inventory worth of the corporation was lower than anticipated.

The retailer's adjusted loss per share was $3.65, exceeding Wall Street's projection of a loss of $2.23 per share.

Compared to November of last year, foot traffic decreased by 23.1 percent, according to Placer.ai data.

Chief Executive Sue Gove said Bed Bath & Beyond did not meet its goals in changing its assortment as it dealt with "credit line constraints" and vendors seeking quicker payments.

"This led to lower receipts and, therefore, lower in-stock levels, in the 70 percent range, which hampered our sales further in an already competitive environment," Gove said.

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According to a former corporate official, the retailer's recent focus on private-label products caused it to reduce orders of goods with nationally recognized trademarks, harming its ties with several suppliers.

Source: Reuters

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