Beleaguered retailer Bed Bath & Beyond (NASDAQ:BBBY) has commenced another round of layoffs as the threat of a potential bankruptcy looms. As per CNBC, the company stated in an internal email that it would be eliminating the role of chief transformation officer, currently held by Anuradha Gupta. BBBY’s CEO Sue Gove said that the company is cutting jobs across its corporate, supply chain, and store portfolio.
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However, the CEO did not specify the number of employees who would be impacted by the latest round of workforce reduction. “While we have taken several important initial steps in our turnaround plan with strong execution, our Q3 2022 results signal that it will take longer to translate actions into outcomes,” Gove wrote in the email. In August 2022, BBBY announced that it would close about 150 stores and reduce its workforce by 20%.
During the Q3 FY22 (ended November 26, 2022) earnings call on Tuesday, Gove stated that the company is targeting an additional $80 million to $100 million in cost reductions “across corporate, including expense and headcount.” Persistent cash burn and mounting losses reflect BBBY’s plight. The company reported a larger-than-expected loss of $3.65 per share as sales declined by 33% to $1.26 billion in Q3 FY22.
BBBY’s strategy to replace national brands with private labels has backfired. The company is now working to rebuild its national brand offerings. Moreover, the company’s sales have been hit by intense competition from online retailers. Furthermore, credit constraints and stringent vendor payment terms impacted the company’s ability to maintain the required stock levels in the fiscal third quarter. Overall, BBBY is struggling to revive its business due to macro pressures and company-specific issues.
Is BBBY a Buy or Sell?
Despite BBBY’s dismal results, shares jumped nearly 28% in Tuesday’s regular trading session and 17.4% in the extended trading hours. The rally in the meme stock seems to have been triggered by speculations that the retailer might be a potential acquisition target. Nonetheless, BBBY stock has tanked more than 84% over the past year.
Wall Street has a Strong Sell consensus rating for BBBY stock based on three Sell ratings. The average BBBY stock price target of $1.50 implies 27.5% downside potential.
