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By Eliza Ronalds-Hannon and Jeannette Neumann – Bloomberg
Bed Bath & Beyond Inc. is starting to close down and liquidate 56 stores as part of a wide-ranging turnaround plan, which the troubled retailer is betting will rekindle some of its lost appeal with US shoppers.
The closings, many of which are happening in the upper Midwest, New York and New Jersey where its locations are more densely packed, are the first round of what will ultimately total about 150 stores.
Along with job cuts for 20% of its workforce, the changes are aimed at slashing costs at a business that has burned through cash and lost customers as it turned away from national brands. To stay afloat, it has paired the cuts with a new $500 million line of credit secured late last month that it plans to use in part to get back on good terms with suppliers.
Adding to the uncertainty surrounding the company’s future, Chief Financial Officer Gustavo Arnal died by suicide days after the company had laid out its turnaround plan to investors.
The company on Thursday published online the list of the stores that are set to be closed in the coming weeks, shortly after Bloomberg News approached the retailer with an internal list of the locations scheduled to be shut down.
“We will continue to review our portfolio where it makes sense to profitably support our customers and business,” company spokeswoman Julie Strider said in an email. “Our immediate focus is on supporting our teams, growing the business, making sure our stores, customers and partners are supported and improving returns to shareholders.”
RELATED: Bed Bath & Beyond chief financial officer dies after skyscraper fall
At a company-wide town hall meeting on Sept. 6, executives began with a moment of silence for Arnal, according to a person who attended, and then sought to reassure employees who had survived the latest round of cuts that the new financing would improve inventory levels and boost sales. Strider didn’t comment on the town hall.
For years, Bed Bath & Beyond stores were a go-to stop for shoppers who needed everything from can openers to towels to coffee makers. The rise of online retailers such as Amazon.com Inc. tarnished some of Bed Bath & Beyond’s appeal. In its struggle to compete, the company tried to streamline offerings by cutting the variety of products.
During recent visits by Bloomberg News reporters to Bed Bath & Beyond stores in New York City and its suburbs, as well as Atlanta, many brand-name items were out of stock, including high-end knives, SimpleHuman trash cans, Westwood bath mats, Brita and ZeroWater water filters, and SodaStream flavor pods.
On the Upper West Side of Manhattan earlier this month, Paul Wortman, a New York resident, said he had come to look for a bath mat, but left empty handed. “The shelves were a little sparse,” he said. “It was almost like they are ready to go out of business.”
Related Articles Retail | Gap slashes 500 corporate jobs in San Francisco, New York in effort to cut costs Retail | Bay Area and California job markets slow in big way as economy wobbles Several years ago the company began to pivot away from the well-known national brands that shoppers had long sought out and began to manufacture and sell more of its own private-label items, which can be more profitable if they resonate with shoppers.
That strategy failed, and the company has realized customers don’t want as many of those in-house brands. During the announcement of the layoffs and changes, Mara Sirhal, the new head of the Bed Bath & Beyond operations, said it would shut down a third of those lines and is “reducing the breadth and depth of owned brands as we lean into national brands.”
Bed Bath & Beyond shares were up 2.4% to $8.97 in New York at 1:02 p.m. The stock was down 40% this year through Wednesday, compared with 17% for the S&P 500 Index. The company is scheduled to report second-quarter results on Sept. 29.
Where Bed Bath & Beyond Is Closing Stores
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