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Bed Bath & Beyond cleans the house.
The retail giant, known for its ubiquitous coupons, announced job cuts and store closures in a bid to cut costs as it continues to struggle with weak sales and a recent senior management shakeup.
In an announcement Wednesday, the New Jersey-based company pledged to cut its workforce by 20% and close about 150 stores.
According to Seth Basham, a managing director at financial and investment firm Wedbush Securities, Bed Bath & Beyond is seeing some of the same problems as other retailers in the home furnishings sector, such as a decline in sales and excess inventory that needs to be sold off.
But, he said, the company was also hurt by an attempt to overhaul its supply chain during the pandemic, which led to understocked store shelves, as well as a failed shift from popular national brands to private labels made by the store.
“It led to further defections of customers from Bed Bath & Beyond and further pressure on their sales trends,” Basham told NPR.
In 2019, the retailer hired former Target CEO Mark Tritton as CEO. Part of his plan to rehabilitate the company was to sell private label merchandise specific to Bed Bath & Beyond like Target does, but the idea didn’t catch on in the same way.
“At Target there is a lot of consumer goods and other things [customers] went to the store for, and they came to like and enjoy the private label brands they saw,” Basham said. “You didn’t have that draw at Bed Bath & Beyond.”
Tritton left the company in June.
Although Bed Bath & Beyond got a boost early in the pandemic as many people spent more time at home, the gains didn’t last, and revenue has continued to fall.
The company said this week that it had net sales of about $1.45 billion in the second quarter of this fiscal year — down about 26% from the same period last year.
Director and interim CEO Sue Gove said Bed Bath & Beyond, after taking a “hard look at our business,” is now making some big changes.
The company expects an inflow of external funding from JP Morgan and the investment company Sixth Street Partners. It is bringing back some beloved national brands, the company said, and it will try to reconnect with customers through its loyalty program.