"Saying goodbye to colleagues and friends is incredibly difficult, but this component of our comprehensive restructuring program is critical to rebuild the foundation of our business, construct a modern, balanced and durable business model, and meet the structural shift in customer shopping and service preferences that we have seen accelerate as a result of COVID-19," Bed Bath & Beyond's President and CEO Mark Tritton said in a press release Tuesday.
The workforce reduction. which Tritton said were made to reduce costs and simplify "operations and support our teams so we can emerge from the pandemic in an even stronger position," is estimated to generate future annual pre-tax cost savings of approximately $150 million, excluding one-time costs and a portion for reinvestment.
Bed, Bath & Beyond expects to incur pre-tax cash restructuring charges of approximately $25 million in fiscal 2020, primarily for severance and related costs, which will be expensed in the fiscal 2020 second quarter.
Bed, Bath & Beyond's overall restructuring plan is expected to deliver annualized earnings before interest, income taxes, depreciation and amortization (EBITDA) between approximately $250 million to $350 million, excluding one-time costs, over the next two-to-three years.
The job cuts are the latest action by the company to reduce costs following the financial devastation from the coronavirus pandemic. Last month, the company announced it would shutter some 200 stores as part of the restructuring plan.
In the first quarter of 2020, Bed Bath & Beyond reported a 49% decrease in net sales to $1.3 billion compared to $2.57 billion a year ago. The company also reported a net loss of $302.29 million, or $2.44 per share, compared to $371.09 million, or $2.91 a share, a year ago.
The company's online sales were a bright spot for the retailer with net online sales accounting for nearly two-thirds of total net sales -- surging 82% during the quarter. With millions of Americans shut-in during April and May, the company saw increases of more than 100% while net store sales decreased roughly 77% percent due to the majority of Bed, Bath & Beyond's brick and mortar outlets being closed for the majority of the quarter.
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According to Bed, Bath & Beyond's Investor FAQ published on July 14, the company will announce more details about the restructuring, along with other long and short-term intiatives the company is taking to reduce costs, in mid to late October.