UNION,
N.J., Aug. 31, 2022 /PRNewswire/ -- Bed Bath
& Beyond Inc. (NASDAQ: BBBY) today announced a strategic
and business update focused on changes intended to meet the demand
of its customers, drive growth and profitability, and improve its
balance sheet and cash flows.
Sue Gove, Director & Interim
Chief Executive Officer commented, "We are embracing a
straight-forward, back-to-basics philosophy that focuses on better
serving our customers, driving growth, and delivering business
returns. In a short period of time, we have made significant
changes and instituted enablers across our entire enterprise to
regain our dominance as a preferred shopping destination for our
customers' favorite brands and exciting products. We command a
special presence in the Home and Baby markets, and we intend to
fulfill our opportunity to be the category retailer of choice."
Ms. Gove continued, "We are working swiftly and diligently to
strengthen our liquidity and secure our path for the future. 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. This includes changing
our merchandising and inventory strategy, which will be rooted in
National Brands. Additionally, we are focused on driving
digital and foot traffic, as well as optimizing our store fleet. We
believe these changes will have a widespread positive impact across
customer experience, inventory assortment, supply chain execution
and cost structure. The customer underpins our decisions, and
we are committed to delivering what they want while driving growth,
profitability, and financial returns."
Strengthening Our Financial
Positioning
Liquidity
The Company announced it has secured financing commitments for
more than $500 million of new
financing, including its newly expanded $1.13 billion asset-backed revolving credit
facility ("ABL facility") and a new $375
million "first-in-last-out" facility ("FILO facility"). The
refinancing of the ABL Facility is being led by J.P. Morgan, and
Sixth Street Partners is serving as the Lender and Agent for the
Company's FILO facility. The commitments are subject to
customary closing conditions. There is no guarantee that the
closing conditions will be satisfied, however, the Company
anticipates that the closing and funding of the loans will occur
imminently.
Additionally, the Company filed a Form S-3 Registration
Statement with the SEC earlier this morning as it prepares for the
potential launch of an at-the-market offering program ("ATM") for
up to 12 million shares of common stock. The potential proceeds
from an ATM are expected to be used for a number of corporate
purposes, including to repurchase or repay some of the Company's
debt.
Cost Structure
The Company has begun implementing significant, additional
SG&A reductions to right-size its cost structure. These reflect
the Company's immediate priorities of merchandising, inventory, and
traffic, and also align with changes in store footprint, lower
Owned Brands development and support, and deferral of longer-term
strategic initiatives. Cost optimization plans include a reduction
in force, including approximately 20% across corporate and supply
chain.
The Company expects the actions announced today to reduce
SG&A by approximately $250
million in fiscal 2022.
Additionally, the Company 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, and are expected to provide sufficient
strategic investment in technology, digital capabilities and
offerings, and store maintenance.
Real Estate and Store Fleet
Optimization
The Company has identified and commenced the closure of
approximately 150 lower-producing Bed Bath & Beyond banner
stores. The Company continues to evaluate its portfolio and leases,
in addition to staffing, to ensure alignment with customer demand
and go-forward strategy.
Better Serving Our
Customers
Merchandising and
Inventory
Customers are expected to benefit from swift actions the Company
is taking in its Bed Bath & Beyond banner to rebalance its
assortment and improve inventory. These include adjusting
merchandise allocations to lead with customer preference and
bringing back popular national brands and introducing new, emerging
direct-to-consumer brands. The Company 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, the Company will be exiting a third of its Owned
Brands by discontinuing three of its nine labels (Haven™, Wild
Sage™ and Studio 3B™). The breadth and depth of inventory across
the Company's six remaining Owned Brands (Simply Essential™,
Nestwell™, Our Table™, Squared Away™, H for Happy™ and Everhome™)
will be substantially reduced to 20 percentage points, reflecting a
more balanced sales to stock ratio moving forward.
Customer Engagement
The Company plans to leverage its recently introduced,
cross-banner loyalty program, Welcome Rewards™ to drive traffic,
sales, and customer retention. Welcome Rewards™ brings valuable
savings, more benefits, and special perks to customers who shop
online and in stores nationwide at Bed Bath & Beyond, buybuy
BABY, and Harmon. Customers earn and redeem points across all three
retail banners with every purchase across all retail channels and
banners. Since recently launching nationally, the program has seen
strong momentum with five million total members, increasing new
membership by 20%.
Supporting Suppliers and Vendor
Partners
The Company's teams are working closely with supplier and vendor
partners to ensure customers have access to a strong assortment of
their favorite brands across both store and digital channels.
The Company will host a supplier event in early-Fall 2022 to
build on new and strengthen existing relationships, address any
issues to ensure strong support, and work collaboratively to create
the best experience for shared customers.
Building on the Strength of buybuy
BABY
The Strategy Committee of the Board of Directors, with the
assistance of independent strategic and financial advisors, has
completed a comprehensive review of the inherent value of the
Company's buybuy BABY banner, which confirmed the banner's
strategic potential. The Board of Directors believes that, at this
time, buybuy BABY will deliver greater value for the Company's
shareholders as part of the Bed Bath & Beyond Inc.
portfolio. The Board of Directors and management team have
identified several strategies to implement impactful, organic
changes to accelerate further growth and unlock the brand's full
potential including building on its digital and registry platforms,
addressing additional age groups and expanding products and
services. The Board of Directors' Strategy Committee will continue
to monitor the buybuy BABY business as it preserves optionality and
future value creation.
Leadership Changes
The Company has realigned its executive leadership team to
reflect the strategic priorities and changes announced today.
Mara Sirhal has been appointed to
Executive Vice President and Brand
President of Bed Bath & Beyond. In addition,
Patty Wu has been promoted to
Executive Vice President and Brand
President of buybuy BABY. The newly created Brand President roles will be responsible for
each banner's merchandising, planning and allocation, brand
marketing, and stores, and will report directly to Ms. Gove.
Ms. Sirhal most recently served as the Company's Executive Vice
President and Chief Merchandising Officer for the Bed Bath &
Beyond banner. Ms. Sirhal joined the Company in January 2021 as Senior Vice President and General
Manager for Harmon to lead all operational aspects of this
business. Ms. Sirhal's retail experience includes nearly 20 years
across a variety of categories in merchandising, product
development, planning, digital, inventory management, supplier
diversity, and leased businesses at Macy's, Inc.
Ms. Wu has served as the Senior Vice President and General
Manager of buybuy BABY since joining the Company in January 2021. Prior to buybuy BABY, Ms. Wu held
several executive leadership positions across retail and business,
including the roles of Chief Commercial Officer of Beautycounter,
Chief Commercial Officer and General Manager of the Baby Division
at The Honest Company, as well as senior management roles at
Mattel, Inc. and Walmart.
In conjunction with these changes, the Company has eliminated
the Chief Operating Officer and Chief Stores Officer roles.
Accordingly, John Hartmann and
Gregg Melnick will be departing the
Company.
CEO Search
Harriet Edelman, Independent
Chair of the Bed Bath & Beyond Inc. Board of Directors, said:
"It is clear from the focused work to date, evidenced by the
breadth of today's announcements, that Sue has quickly formulated
and executed important changes to customer-facing strategy,
operations, management team, cost structure and liquidity. On
behalf of the entire Board, we are very pleased and confident that
Sue's dedicated leadership will continue to have a significant,
positive impact on Company performance. Regarding our search for
the Company's next Chief Executive Officer, the Company's Board of
Directors previously announced that it retained nationally
recognized firm, Russell Reynolds.
We are in the earliest phase of the search process and will provide
an update when appropriate."
Financial Update
(Interim)
At this time, the Company is providing the following interim
financial update for the second quarter of fiscal 2022 ended
August 27, 2022:
– Net Sales of
approximately $1.45 billion
– Comparable Sales
decline of approximately 26% compared to the second quarter of
fiscal 2021
– Free Cash Flow usage of approximately
$325 million
Additionally, the Company is providing the following interim
financial update for its fiscal 2022 expectations:
– Comparable Sales
decline in the 20% range driven by improvements in the second half
of fiscal 2022 versus the first half of fiscal 2022
– Adjusted SG&A
expense approximately $250 million
below last year reflecting cost optimization actions occurring in
the second half of fiscal 2022
– Capital expenditures of
approximately $250 million versus the
Company's original plans of approximately $400 million
The Company has not yet completed its quarterly financial close
and plans to provide its full financial results for the second
quarter on Thursday, September 29,
2022. Until that time, the preliminary results described in
this press release are estimates only and remain subject to change
and finalization based on management's ongoing review of results of
the quarter and completion of all quarter-end close review
process.
Conference Call and Investor
Presentation
To discuss today's announcement, Bed Bath & Beyond Inc. will
host a conference call with analysts and investors today
at 8:15am EDT and may be accessed by dialing
1-404-400-0571, or if international, 1-866-374-5140, using
conference ID number 58295059#. A live audio webcast of the
conference call will also be available on the investor relations
section of the Company's website
at http://bedbathandbeyond.gcs-web.com/investor-relations. The
webcast will be available for replay after the call.
The Company has also made available an Investor Presentation on
the investor relations section of the Company's website
at http://bedbathandbeyond.gcs-web.com/events-and-presentations.
About the Company
Bed Bath & Beyond Inc. and subsidiaries (the "Company") is an omnichannel retailer that makes it easy
for our customers to feel at home. The Company sells a wide
assortment of merchandise in the Home, Baby, Beauty and Wellness
markets. Additionally, the Company is a partner in a joint venture
which operates retail stores in Mexico under the name Bed Bath &
Beyond.
The Company
operates websites at bedbathandbeyond.com, bedbathandbeyond.ca, buybuybaby.com, buybuybaby.ca, and
facevalues.com.
Non-GAAP Information
This press release contains certain non-GAAP information
Adjusted SG&A and Free Cash Flow. Free Cash Flow is defined as
operating cash flow less capital expenditures. Non-GAAP information
is intended to provide visibility into the Company's core
operations and excludes special items, including non-cash
impairment charges related to certain store-level assets and
tradenames, loss on sale of businesses, loss on the extinguishment
of debt, charges recorded in connection with the restructuring and
transformation initiatives, which includes accelerated markdowns
and inventory reserves related to the planned assortment transition
to Owned Brands and costs associated with store closures related to
the Company's fleet optimization and the income tax impact of these
items. The Company's definition and calculation of non-GAAP
measures may differ from that of other companies. Non-GAAP
financial measures should be viewed in addition to, and not as an
alternative for, the Company's reported GAAP financial results. The
Company is not providing a reconciliation of its forward looking
quarter ended August 27, 2022
non-GAAP preliminary expected results or its fiscal year 2022
guidance with respect to, Adjusted SG&A and Free Cash Flow
because it does not currently have sufficient information to
accurately estimate all of the variables and individual adjustments
for such reconciliation. As such, the Company cannot estimate on a
forward-looking basis without unreasonable effort the impact these
variables and individual adjustments will have on its reported
results.
Forward-Looking
Statements
This report contains forward-looking statements within the
meaning of Section 21E of the Exchange Act, including, but not
limited to, our progress and anticipated progress towards our
long-term objectives, as well as more generally the status of our
future liquidity and financial condition and our outlook for our
2022 fiscal second quarter and 2022 fiscal year. Many of these
forward-looking statements can be identified by use of words such
as may, will, expect, anticipate, approximate, estimate, assume,
continue, model, project, plan, goal, preliminary, and similar
words and phrases, although the absence of those words does not
necessarily mean that statements are not forward-looking. Our
actual results and future financial condition may differ materially
from those expressed in any such forward-looking statements as a
result of many factors. Such factors include, without limitation:
general economic conditions including the recent supply chain
disruptions, labor shortages, wage pressures, rising inflation and
the ongoing military conflict between Russia and Ukraine; challenges related to our
relationships with our suppliers, including the failure of our
suppliers to supply us with the necessary volume and type of
products; the impact of cost-saving measures; our inability to
generate sufficient cash to service all of our indebtedness or our
ability to access additional capital; our inability to complete our
expected credit financings; changes to our credit rating or the
terms on which vendors or others will provide us credit; the impact
of strategic changes, including the reaction of customers to such
changes; a challenging overall macroeconomic environment and a
highly competitive retailing environment; risks associated with the
ongoing COVID-19 pandemic and the governmental responses to it,
including its impacts across our businesses on demand and
operations, as well as on the operations of our suppliers and other
business partners, and the effectiveness of our and governmental
actions taken in response to these risks; changing consumer
preferences, spending habits and demographics; demographics and
other macroeconomic factors that may impact the level of spending
for the types of merchandise sold by us; challenges in executing
our omni-channel and transformation strategy, including our ability
to establish and profitably maintain the appropriate mix of digital
and physical presence in the markets we serve; our ability to
successfully execute our store fleet optimization strategies,
including our ability to achieve anticipated cost savings and to
not exceed anticipated costs; our ability to execute on any
additional strategic transactions and realize the benefits of any
acquisitions, partnerships, investments or divestitures;
disruptions to our information technology systems, including but
not limited to security breaches of systems protecting consumer and
employee information or other types of cybercrimes or cybersecurity
attacks; damage to our reputation in any aspect of our operations;
the cost of labor, merchandise, logistical costs and other costs
and expenses; potential supply chain disruption due to trade
restrictions or otherwise, and other factors such as natural
disasters, pandemics, political instability, labor disturbances,
product recalls, financial or operational instability of suppliers
or carriers, and other items; inflation and the related increases
in costs of materials, labor and other costs; inefficient
management of relationships and dependencies on third-party service
providers; our ability to attract and retain qualified employees in
all areas of the organization; unusual weather patterns and natural
disasters, including the impact of climate change; uncertainty and
disruptions in financial markets; volatility in the price of our
common stock and its effect, and the effect of other factors on our
capital allocation strategy; changes to statutory, regulatory and
other legal requirements or deemed noncompliance with such
requirements; changes to accounting rules, regulations and tax
laws, or new interpretations of existing accounting standards or
tax laws; new, or developments in existing, litigation, claims or
assessments; and a failure of our business partners to adhere to
appropriate laws, regulations or standards. Except as required by
law, we do not undertake any obligation to update our
forward-looking statements. These statements are based on our
management's beliefs and assumptions, which in turn are based on
currently available information. These assumptions could prove
inaccurate.
Any forward-looking statement we make in this report or
elsewhere speaks only as of the date on which we make it. The risks
identified above are not exhaustive, and you should be aware that
there may be other risks that could adversely affect our business
and financial performance. New risks and uncertainties arise from
time to time, and it is impossible for us to predict these events
or how they may affect us. In any event, these and other important
factors may cause actual results to differ materially from those
indicated by our forward-looking statements. We have no duty, and
do not intend, to update or revise the forward-looking statements
we make in this report or elsewhere, except as may be required by
law. In light of these risks and uncertainties, you should keep in
mind that the future events or circumstances described in any
forward-looking statement we make in this report or elsewhere might
not occur.
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SOURCE Bed Bath & Beyond