Ask Bath and Beyond to cut 7% of company employees, eliminating operating roles
Signs appear outside a Bed Bath & Beyond Inc. store in Los Angeles, California, USA, Monday, September 19, 2016.
Patrick T. Fallon | Bloomberg | Getty Images
Bed Bath & Beyond announced Tuesday that, as part of its efforts to reduce costs, cutting its employees by 7% and eliminating chief executive.
As part of this decision, COO Eugene Castagna, who also had the title of President, will leave the company. The stock fell more than 1[ads1]% after the news.
"Although decisions that affect our staff are difficult, today's action is an important step to simplify the company's structure and ensure that our resources are in line with the business we manage today," said Bed Bath & Beyond interim CEO Mary Winston in a statement. "We are still confident of the underlying business and our ability to leverage the strength of the Bed Bath & Beyond brand and our enduring relationship with our customers to deliver our near-term priorities and transform the company."
Other posts eliminated include vice presidents, directors, managers, and professional staff.
At a revenue interview in July, Winston had outlined its four key initiatives: cost structure resettlement, organizational structure refinement, stabilization and growth of sales and asset optimization. Tuesday's move looks to achieve these goals.
The company reiterated that it expects earnings per share to fall to a range from $ 2.11 to $ 2.20 for the second quarter. The company had announced its lowered forecast in its latest earnings. The estimate excludes restructuring costs.
Bed Bath and Beyond expects earnings per share to improve, with the majority of the gains earned in the second half of the fiscal year.
The organizational changes will result in an estimated $ 30.7 million in just savings, before restructuring will cost around $ 12 million. The company has a market value of around $ 1.1 billion.
A thirty activist investor has pushed for changes in the company since March, and has made an effort to replace the entire board of 12 people by exploiting their share. Legion Partners Asset Management, Macellum Advisors and Ancora Advisors have a 5% collective stake in the company, saying that the big box retailer has fallen behind as more customers turn to online shopping. The activists are pushing for Bed Bath & Beyond to consider selling underperforming assets such as Buy Buy Baby. The stock rocketed more than 22% after the news.
