Bed Bath & Beyond accelerates realignment of store management structure
Bed Bath & Beyond said that it has accelerated the realignment of its store management structure to support its customer-focused initiatives and omnichannel growth. These actions are part of the Company's continuous efforts to improve and capitalize on the opportunities presented by the evolving retail landscape.Steven H. Temares, CEO and Member of the Board of Directors of Bed Bath & Beyond stated, "With the evolution in retail, we continue to strengthen our digital infrastructure and invest heavily in areas such as analytics, information technology, pricing, e-commerce, marketing, supply chain, and our contact centers. As we work to continue to satisfy our customers through our omnichannel capabilities, the role of our stores is also evolving, and remains crucial to achieving our mission of being trusted by our customers as the expert for the home and heart-felt life events. The actions taken today to accelerate the realignment of our store management will allow us to better support our customer-focused initiatives as well as support our omnichannel growth, while driving operational excellence." The Company, after an extensive and careful review, has initiated in approximately half of its U.S. Bed Bath & Beyond stores and about a dozen U.S. buybuy BABY stores, a limited realignment of its store management organization, primarily resulting in a reduction of about 880 Department and Assistant Store Manager positions. These actions accelerate a transition in store management roles that began more than a year ago through store hiring practices and attrition. These efforts simplify the store management structure and strengthen the Company's ability to meet the growing and changing desires of its customers by focusing additional staffing needs in non-management roles, and placing less emphasis on a management structure that supported a more rapid rate of store growth. There are no further reductions planned in connection with this realignment. After this transition is complete, the Company expects overall staffing levels in-store to remain the same as before this realignment, or in some cases, increase. These organizational changes are estimated to generate future annual pre-tax cost savings of approximately $16M. Due to the timing of these changes, the pre-tax cost savings for the remainder of fiscal 2017 are estimated to be approximately $7M. The Company expects to incur pre-tax cash restructuring charges of approximately $17M in fiscal 2017, primarily for severance and related costs in conjunction with these changes, all of which will be expensed in the second quarter. In addition to the actions taken today, Bed Bath & Beyond has other ongoing transformational initiatives to improve operational efficiencies across the organization and enhance profitability. As part of these efforts, a Strategic Portfolio Management Office has been established and additional resources have been engaged, including industrial engineers, to drive operational excellence. The short-term costs associated with these ongoing initiatives, estimated to be several million dollars, are expected to be incurred throughout the remainder of fiscal 2017. The Company plans to provide additional information about these ongoing initiatives, including the expected costs and benefits, during its next quarterly conference call on September 19, 2017, and throughout the year. The financial impact of these organizational changes and transformational initiatives was not previously included in the Company's full-year modeling assumptions provided on April 5, 2017.