(AOF) – Struggling Bed Bath & Beyond has updated its strategy. The home goods retailer will notably reduce its workforce and close stores. The company will implement a “significant” cost-cutting program aimed at cutting expenses by $250 million in fiscal 2022. The program includes reducing the workforce by 20%. Capital expenditure plans for the year were also reduced from $400 million to $250 million.
In addition, the company began closing approximately 150 “low-yielding” Bed Bath & Beyond stores. The company plans to exit a third of its “own label” operations, dropping its Haven, Wild Sage and Studio 3B labels.
Bed Bath & Beyond provided a financial update for the current quarter. Net sales expected to be approximately $1.45 billion and comparable store sales expected to decline 26% from a year ago. Those numbers compare to estimates from FactSet, which forecast net sales of $1.52 billion and a drop in same-store sales of 20.7%.
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big concerns
According to the Federation of specialized trade, Procos, activity from January to May is very significantly down compared to the same period in 2019, at – 8.8%. Store traffic in May 2022 remained lower than in May 2019, but the decline was limited to 6.5%, much better than in April (-19.6% compared to April 2019). In a very uncertain context, several elements weigh on the profitability of companies, in particular the increase in the cost of electricity and the indexation of rents, even if the composition of the ILC (commercial rent index) has been modified. Previously it was composed of 50% inflation, 25% construction cost index and 25% change in retail turnover. From now on, it will only take into account inflation and the cost of construction because the previous formula included sales made by the ‘pure players’ of the Net, which increased the rents of physical stores.