Bed Bath & Beyond is preparing to cut 20% of its workforce and close 150 stores, the company announced on Wednesday.
The home goods retailer saw a $2.83 loss per share in its first quarter, missing the $1.39 loss per share predicted by analysts. Bed Bath & Beyond CEO Mark Tritton subsequently stepped down from his position and was replaced by interim CEO Sue Gove, who served on the company’s board.
“We are embracing a straight-forward, back-to-basics philosophy that focuses on better serving our customers, driving growth, and delivering business returns,” Gove said in a press release announcing the layoffs. “In a short period of time, we have made significant changes and instituted enablers across our entire enterprise to regain our dominance as a preferred shopping destination for our customers’ favorite brands and exciting products.”
Among other changes in tactics, Bed Bath & Beyond is shifting its merchandise allocations to prioritize popular national brands and new direct-to-consumer products, as well as leveraging its new loyalty program to increase customer retention.
“We believe these changes will have a widespread positive impact across customer experience, inventory assortment, supply chain execution and cost structure,” Gove added. “The customer underpins our decisions, and we are committed to delivering what they want while driving growth, profitability, and financial returns.”
Amid persistent inflationary pressures and supply chain bottlenecks, companies in other sectors have likewise slowed hiring or introduced layoffs. The United States met the rule-of-thumb definition of a recession — two consecutive quarters of negative growth — last month as the economy shrank at a 1.5% annualized rate in the first quarter and contracted at a 0.6% pace in the second quarter.
Bed Bath & Beyond is among several leading retailers taking steps to cope with the tumultuous economy. Target is prioritizing food, household items, and other inventory with a high turnover rate — even canceling $1.5 billion in orders for goods with lower demand. Meanwhile, Walmart is attracting new customers among wealthier subsets of the population struggling to contend with higher prices at competing stores.
“It’s a conflicting period in terms of the data. If you look at what’s happening across categories and across income levels, inflation is having an impact particularly for those who don’t have as much money,” Walmart CEO Doug McMillon recently told CNBC. “Higher income families are shopping at Walmart because they’re so price sensitive right now … families making more than $100,000 in household income have driven a lot of our growth during this last quarter.”
Wage inflation has also been a salient factor for employers as labor force participation rates fail to recover. The metric dropped from 66% in 2008 to 63% in 2020, then fell another 3% between February 2020 and April 2020 alone amid government lockdowns and business closures, according to data from the Bureau of Labor Statistics.
A recent poll from Bankrate shows that Americans are reporting changes in behavior as economic pressures continue. Among the 74% of respondents who are taking steps to prepare for a recession, 47% are cutting discretionary spending, 35% are saving more for emergencies, and 30% are paying credit card debt.
“While some Americans indicate they believe the economy is already in a recession, it is perhaps more important that so many are already taking actions based on their fears or beliefs that one is inevitable over the next year or so,” Bankrate senior economic analyst Mark Hamrick commented.