Bed Bath & Beyond plans to lay off hundreds of employees in two states, the latest sign of trouble in the retail landscape.
On Monday, the home furnishings retailer announced a new $850 million, three-year secured asset-based revolving credit facility that replaces its existing $250 million unsecured revolving credit facility and expires in three years.The move is designed to strengthen BB&B’s liquidity, which was intact prior to the coronavirus crisis.
“The company went into the COVID-19 pandemic with a healthy cash position. This new [asset-backed loan] facility, in combination with actions being taken to drive cash flow, are enabling a more robust balance sheet,” said Gustavo Arnal, chief financial officer and treasurer.
Like its retail peers, BB&B lost the bulk of its sales when COVID-19 forced its stores closed in mid-March while the subsequent consumer shift to e-commerce put added pressure on its margins. The chain also furloughed the majority of its store associates and some corporate employees, on top of extending its payment terms for goods, services and rent.
But now the home goods retailer has also filed layoff notices under Florida and New Jersey’s Worker Adjustment and Retraining Act (WARN), which requires business to give workers 60 days’ advance notice when closing a location or instituting mass layoffs. The Florida notice says 220 employees in a customer service center operation are affected, while the New Jersey filing pertains to the layoff of 148 workers. Sources said the latter also involves a call center.
Sources also said the company is scouring the market for buyers that might be interested in its 70-store Christmas Tree Shops business and Cost Plus World Market, which operates 260 locations. Earlier this year, the company sold One Kings Lane and is waiting for the sale of its PersonalizationMall.com business for $250 million to 1-800-Flowers.com to close. One Kings Lane sold for an undisclosed sum to CSC Generation, an investment platform and holding company that also owns DirectBuy, Z Gallerie and the intellectual property of department store retailer Bon-Ton.
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The asset sales are part of a turnaround plan under CEO Mark Tritton, who joined the company in November from his post as executive vice president and chief merchandising officer at Target. BB&B said back in February that the restructuring plan would cut 500 jobs as he aimed to reset its cost structure to focus on the home sector, essentially its core Bed Bath & Beyond and Buy Buy Baby nameplates. It also operates the Harmon Face Value banner.
Sources said they expect the company to re-evaluate its store network—in which 220 leases are up for renewal, Triton said—and determine whether or not to shutter some stores, with closures coming by the end of January.
In the meantime, the home textiles retailer has accelerated its buy online, pickup in store, or BOPIS, option, as well as contactless curbside pickup services. It began reopening stores in late May and expects to have 95 percent reopened by the end of this week and nearly all stores back online by July.