Bed Bath & Beyond will cut its corporate staff by 7% and eliminate the role of COO as part of a cost restructuring. President and COO Eugene Castagna has left the company, and other departures will include vice presidents, directors, managers and professional staff.
The changes are expected to generate pre-tax net savings of approximately $18.9 million for the remainder of fiscal 2019 and $30.7 million annually in future fiscal years. Bed Bath & Beyond expects to incur charges of approximately $12 million in relation to the restructuring, primarily due to severance and related costs. The retailer will continue looking for additional cost-saving opportunities.
“As we reset our approach to the business transformation underway, we are executing against four key near-term priorities including resetting the cost structure,” said Mary Winston, Interim CEO at Bed Bath & Beyond in a statement. “While decisions that impact our staff are difficult, today’s action is an important step in simplifying our corporate structure and ensuring our resources are aligned with the business we are managing today. We remain confident in the underlying business and our ability to leverage the strength of the Bed Bath & Beyond brand and our lasting connection with customers to deliver on our near-term priorities and transform the company.”
This restructuring represents the latest shakeup at Bed Bath & Beyond in 2019. Co-founders Warren Eisenberg and Leonard Feinstein left the board of directors in April, and CEO Steven Temares resigned due to pressure from three activist investors: Legion Partners Asset Management, Macellum Advisors and Ancora Advisors.
The firms, which together hold a 5% stake in Bed Bath & Beyond, complained that the retailer has followed a “continued pattern of value destruction,” “repeatedly failed execution and strategy,” and suffers from “excessive executive compensation and poor alignment of pay with performance.”
Bed Bath & Beyond net sales fell 2.6% during fiscal 2018, which was attributed to a having a 52-week year as opposed to a 53-week year in fiscal 2017. Same-store sales fell 1.1% during the period, with mid-single-digit declines in brick-and-mortar sales somewhat offset by e-Commerce growth.