Bed Bath & Beyond Inc., Union, announced a strategic restructuring program as part of the next phase of its work to rebuild the foundation of the business and create a sustainable, durable business model. The restructuring program includes a reorganization and simplification of its field operations, significant reduction in management positions across the business, and outsourcing of several functions. As part of the program, Bed Bath & Beyond commenced a workforce reduction impacting approximately 500 positions.
This is a major pivot in the Company’s plan to realize several hundred million dollars of cost saving opportunities over the long-term. The overall restructuring program is expected to reduce annual SG&A expense by approximately $85 million, as part of a strategic realignment to create greater focus on the Company’s core business and initiatives designed to enhance the customer experience, drive sales, and position the Company for long-term success.
Bed Bath & Beyond’s President and CEO, Mark Tritton said, “We are announcing extensive changes today to right-size our organization as part of our efforts to reconstruct a modern, durable business model. We do not take this action lightly but, while difficult, these measured and purposeful steps are necessary. This will reset our cost structure, allowing us to re-invest where it matters most to our customers, to re-establish our authority in the Home space.”
Reconstructing the Operating Model
Reinforcing the Company’s preliminary strategic plan, which includes action across five strategic pillars: Product; Price; Promise; Place; and People, Bed Bath & Beyond has been conducting a comprehensive review of its business to determine ways to drive efficiency and effectiveness.
The Company is now taking steps to reconstruct and modernize its operating model, accelerating its transformation and balancing near-term priorities to generate savings while reinvesting for future growth. The restructuring program consists of a reset of the cost structure that will:
- Simplify and remove spans and layers of management to bring the Company in line with industry best practice;
- Remove duplicative or redundant roles to streamline the organization;
- Reduce and realign regional zones to simplify and restructure field operations; and
- Outsource several functions to allow the Company to focus on core competencies.
In connection with this restructuring program, the Company expects to incur net pre-tax charges of approximately $26 million, primarily for severance and related costs, all of which will be expensed in the fiscal 2019 fourth quarter.
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