Bed Bath & Beyond Inc. (Nasdaq: BBBY) today announced a major realignment of its organizational structure, estimated to generate future annual pre-tax cost savings of approximately $150 million. This represents a portion of the anticipated savings from the previously disclosed comprehensive restructuring plan, which is expected to deliver annualized improvement in Earnings before Interest, Income Taxes, Depreciation and Amortization (EBITDA) of between approximately $250 million to $350 million, excluding one-time costs, over the next two-to-three years.
The realignment will further simplify the Company's operations, support investment in its strategic growth plans, and provide additional financial flexibility. The changes will help fund a number of growth initiatives to enhance the omni-always shopping experience in store and online, building on the recent introduction of Buy-Online-Pickup-In-Store (BOPIS) and Curbside Pickup services, in addition to supporting plans to launch an array of new customer-inspired owned brands in 2021 and deliver an end-to-end transformation of the Company's supply chain.
Organizational Realignment
In conjunction with the organizational realignment, the Company has implemented a significant workforce reduction of approximately 2,800 roles from across its corporate headquarters and retail banner stores, effective immediately. This action is designed to further reduce layers at the corporate level, significantly reposition field operations to better serve customers in a digital-first shopping environment, as well as realign technology, supply chain and merchandising teams to support strategic growth initiatives.
In line with previously disclosed statements, these organizational changes are estimated to generate future annual pre-tax cost savings of approximately $150 million, excluding one-time costs and a portion for reinvestment, and is in addition to the expected $85 million in SG&A savings associated with the strategic restructuring program announced in February 2020. The Company expects to incur pre-tax cash restructuring charges of approximately $25 million in fiscal 2020, primarily for severance and related costs in conjunction with these changes, all of which will be expensed in the fiscal 2020 second quarter.
This action represents a portion of the anticipated savings from the previously disclosed comprehensive restructuring plan, which is expected to deliver annualized EBITDA improvement of between approximately $250 million to $350 million, excluding one-time costs, over the next two-to-three years through a robust store optimization project and annual savings from product sourcing through renegotiations with existing vendors. In addition to these cost savings, the Company expects to generate deeper assortment, sourcing and supply chain opportunities as it pursues growth in owned brands.
Bed Bath & Beyond's President and CEO, Mark Tritton said, "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. Today's action forms part of a series of changes we are making to reduce the cost of our business, further simplify our operations and support our teams so we can emerge from the pandemic in an even stronger position.
"We have made significant progress this year and these purposeful interventions are designed to allow us to maintain our financial flexibility and re-invest where it matters most to our customers and our people. As we work to re-establish our authority in Home, Baby, Beauty and Wellness, we are encouraged by the strong customer response to new services such as BOPIS and Curbside Pickup, and the continued strength in our digital channels as we improve the curation of our product assortment, enhance the ease and convenience of the shopping experience, and make it easier to feel at home."
About the Company
Bed Bath & Beyond Inc. and subsidiaries is an omnichannel retailer that makes it easy for our customers to feel at home. The Company sells a wide assortment of domestic merchandise and home furnishings. The Company also provides a variety of textile products, amenities and other goods to institutional customers in the hospitality, cruise line, healthcare and other industries. Additionally, the Company is a partner in a joint venture which operates retail stores in Mexico under the name Bed Bath & Beyond.
