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Bed Bath & Beyond to cut workers and close 150 stores

Bed Bath & Beyond stock plummets
Bed Bath & Beyond stock plummets after "meme stock" trading fallout 04:51

Bed Bath & Beyond on Wednesday said it is cutting 20% of its corporate and supply-chain staff and closing 150 poor-performing stores as it seeks to cut costs amid a sales slump. Shares of the company plunged 25% in morning trading. 

The company also said it has lined up $500 million in new financing, including a $375 million loan. It also announced plans to sell more shares to the public, with the proceeds directed toward paying down debt. The retailer added that its second-quarter same-store sales crumbled about 26% compared with the year-earlier period.

Bed Bath & Beyond has been struggling with declining sales and mounting losses as consumers have shifted to competitors. Earlier this year, GlobalData analyst Neil Saunders noted in a research report that the chain's stores are "rather messy and lack basic merchandising discipline." While its shares had attracted meme-stock traders, the retailer lost one of its big investors earlier this month when Ryan Cohen, the billionaire founder of online pet food company Chewy, sold his stake.

The retailer is overhauling its strategy and operations at a time when consumers are cutting back on spending amid high inflation and weaker household finances, noted Saunders in a research note Wednesday.

"Bed Bath & Beyond is reinventing itself at the worst possible time," Saunders wrote. "Indeed, the preliminary second quarter results – with a catastrophic sales decline of 26% — underline the extent of the problem."

Bed Bath & Beyond said it will also streamline its store brands by discontinuing three of its nine labels: Haven, Wild Sage and Studio 3B.

The company has almost 1,000 locations, which means that it will be shuttering about 15% of its stores, according to FactSet.

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