MW Bed Bath & Beyond stock plunges after strategic update details cuts cuts, sales warning
By Tomi Kilgore
Retailer prepares for ATM offering of up to 12 million shares, or 15% of shares outstanding
Shares of Bed Bath & Beyond Inc. plunged Wednesday after the struggling home goods retailer's strategic update, in which the company said it would cut its workforce and close stores, and provided a downbeat sales outlook.
The company also said it was preparing to launch an at-the-market $(ATM.UK)$ offering of up to 12 million shares, which would represent 15% of the shares outstanding.
The meme stock $(BBBY)$ dropped 24.2% in premarket trading, after being down about 14% just before the much-anticipated update.
That follows a 9.3% pullback on Tuesday, after the stock soared 32.2% in two days after the strategic update was announced.
"We are working swiftly and diligently to strengthen our liquidity and secure our path for the future," said Interim Chief Executive Sue Gove. "We have taken a thorough look at our business, and today, we are announcing immediate actions aimed to increase customer engagement, drive traffic, and recapture market share."
The company said it will implement a "significant" cost-cutting program aimed at lower expenses by $250 million in fiscal 2022. The program includes reducing its workforce, including about 20% across corporate and supply chain.
Capital expenditure plans for the year were also reduced, to an expected $250 million from previous guidance of $400 million.
In addition, the company has commenced the closing of about 150 "lower-producing" Bed Bath & Beyond stores. The company plans to exit one-third of its Owned Brand, through the discontinuation of its Haven, Wild Sage and Studio 3B labels.
Bed Bath & Beyond provided a financial update for the current fiscal second quarter, with net sales expected to be about $1.45 billion and same-store sales expected to decline 26% from a year ago. That compares with the FactSet consensus for net sales of $1.52 billion and for same-store sales to fall 20.7%.
Regarding liquidity, the company said it has secured commitments for more than $500 million in new financing. That includes the newly expanded $1.13 billion asset-backed revolving credit facility and a new $375 million "first-in-last-out" (FILO) facility.
The stock has run up 40.0% over the past three months through Tuesday but has dropped 16.9% year to date. In comparison, the S&P 500 index has shed 16.4% year to date.
-Tomi Kilgore
$(END)$ Dow Jones Newswires
August 31, 2022 08:03 ET (12:03 GMT)
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