Bed Bath & Beyond to Lay Off More Employees as Cash Reserves dwindle

Bed Bath & Beyond Inc. (BBBY) is a leading retailer of home furnishings and housewares. The company operates more than 1,000 stores across the United States and Canada. Bed Bath & Beyond offers a wide variety of products, including bedding, bath towels, kitchenware, and home decor.

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The home-goods retailer said it plans to lay off more employees and cut costs further after its cash reserves and sales declined in the most recent period.
The retailer's operations used up about $300 million in cash in the quarter ended Nov. 26, leaving it with about $200 million in cash and equivalents at the end of the period.

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The company said last week that it was running low on funds and considering several options, including seeking relief in bankruptcy court. The retailer is in the early stages of planning for a chapter 11 bankruptcy filing, which could come within weeks, according to people familiar with the situation.

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Sue Gove, the company's chief executive, told analysts on a conference call that the company is pushing through $80 million to $100 million in cost savings across corporate functions, including an unspecified number of job cuts. This is in addition to the $500 million in savings that the company had announced earlier.
Bed Bath & Beyond is in the process of closing about 150 underperforming stores. This plan was announced in late August, when the company had more than 700 locations.

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Bed Bath & Beyond on Tuesday released results from its latest quarter that were largely in line with the warning it had issued last week. The company reported a net loss of $154 million, or $0.62 per share, for the quarter ended May 30, 2020, compared to a net loss of $249 million, or $1.03 per share, for the same quarter last year.
Net sales fell sharply in the most recent quarter, dropping 33% to $1.26 billion. This was a steep decline from the $1.88 billion in sales recorded in the same quarter a year ago. The results were dragged down by Bed Bath & Beyond stores, where sales excluding newly opened or closed stores fell 34%. Same-store sales at its Buybuy Baby division fell in the low twenties percentage range.

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Its net loss increased to $393 million from $276 million a year ago. Bed Bath & Beyond secured $500 million in financing in August. The company said Tuesday that it had about $500 million in total liquidity, including what it could still borrow against its credit lines.

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The company's shares have fallen 89% over the past year, closing Monday at $1.62. However, shares gained nearly 15%, or 24 cents, in Tuesday trading.
The company has been struggling since its failed makeover, which replaced name-brand products with private-label goods. This turned off many shoppers, and led to the resignation of former CEO Mark Tritton in June. This was followed by an exodus of senior leaders. Ms. Gove, a former retail executive and Bed Bath & Beyond director, was named permanent CEO in October, after running the company on an interim basis since Mr. Tritton’s departure.

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On Tuesday, Ms. Gove said that the company is working to improve its inventory situation while also getting more national brands and refining its assortment of private-label products. She told analysts that private-label penetration had declined 10 percentage points compared with the first half of the company's fiscal year, which began in February.

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She explained that credit constraints and vendors demanding better payment terms made it harder for the company to keep its shelves stocked during the period. She noted that when stock levels improve, as they have in certain categories, sales improve. Shopper visits to Bed Bath & Beyond stores have declined in recent months, according to data from Placer.ai. In December, visits were down 26.5% compared to the same month in the previous year. This follows a year-over-year drop of 23.1% in November.

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Bed Bath & Beyond held a supplier summit in September to discuss its turnaround strategy. However, many suppliers remain skeptical that the company can win back shoppers in the face of stiff competition. Some suppliers have even stopped shipments altogether due to concerns about payment terms. Although a chapter 11 filing is not definite, it is probable that the company will obtain the financing it needs to continue operating during bankruptcy from its current creditors, according to sources familiar with the situation.

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Bed Bath & Beyond's shares and bonds have been trading at distressed levels for some time now. The retailer has reported a string of losses and burned through its cash reserves, leading many to believe that it is in serious financial trouble. In an effort to turn things around, the company has been working with financial adviser Lazard and law firm Kirkland & Ellis LLP on strategic options.

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The company’s loan deal in August helped it navigate the critical holiday season, and it has been trying to reduce other debts and reassure vendors. It also pursued a series of debt exchanges that would have extended maturities and reduced interest expenses, but also required investors to take substantial haircuts on their principal.