In conjunction with an organizational realignment, Bed Bath & Beyond has implemented a significant workforce reduction of approximately 2,800 roles from across its corporate headquarters and retail banner stores, effective immediately.
The company said the action is designed to further reduce layers at the corporate level, significantly reposition field operations to better serve customers in a digital-first shopping environment, as well as realign technology, supply chain and merchandising teams to support strategic growth initiatives.
The moves are estimated to generate future annual pre-tax cost savings of approximately $150 million. This represents a portion of the anticipated savings from a previously disclosed comprehensive restructuring plan, which is expected to deliver annualized improvement in EBITDA of between approximately $250 million to $350 million, excluding one-time costs, over the next two-to-three years.
The realignment will further simplify the company’s operations, support investment in its strategic growth plans, and provide additional financial flexibility. The changes will help fund a number of growth initiatives to enhance the omni-always shopping experience in store and online, building on the recent introduction of buy-online-pickup-in-store (BOPIS) and curbside pickup services, in addition to supporting plans to launch an array of new customer-inspired owned brands in 2021 and deliver an end-to-end transformation of the company’s supply chain.
The company said it expects to incur pre-tax cash restructuring charges of approximately $25 million in fiscal 2020, primarily for severance and related costs in conjunction with these changes, all of which will be expensed in the fiscal 2020 second quarter.
Mark Tritton, Bed Bath & Beyond’s president and CEO, said, “Saying goodbye to colleagues and friends is incredibly difficult, but this component of our comprehensive restructuring program is critical to rebuild the foundation of our business, construct a modern, balanced and durable business model, and meet the structural shift in customer shopping and service preferences that we have seen accelerate as a result of COVID-19. Today’s action forms part of a series of changes we are making to reduce the cost of our business, further simplify our operations and support our teams so we can emerge from the pandemic in an even stronger position. We have made significant progress this year and these purposeful interventions are designed to allow us to maintain our financial flexibility and re-invest where it matters most to our customers and our people. As we work to re-establish our authority in home, baby, beauty and wellness, we are encouraged by the strong customer response to new services such as BOPIS and curbside pickup, and the continued strength in our digital channels as we improve the curation of our product assortment, enhance the ease and convenience of the shopping experience, and make it easier to feel at home.”