Big Layoffs at Bed Bath & Beyond (BBBY), Snap (SNAP) – Investopedia
Brick-and-mortar retailer Bed Bath & Beyond Inc. (BBBY) and social media site Snap Inc. (SNAP) each announced restructuring plans on Aug. 31, 2022, which include laying off approximately 20% of their respective staffs. The announcement from Bed Bath & Beyond also indicated that the retailer will close about 150 of its stores.
The reaction of the markets to the announcement from Bed Bath and Beyond was negative, with its shares down by about 22% from the prior close in early trading on the morning of Aug. 31, 2022. Apparently, investors are taking a dim view of the company's future prospects and see the announcement as a sign of ongoing weakness. Bed Bath and Beyond stock had surged from a value of about $6 per share on Aug. 1 to a high of about $23 on Aug. 17. It is trading below $10 on the morning of Aug. 31.
Meanwhile, shares of Snap rose by about 11% from their prior close. The stock had jumped from around $10 on Aug. 1 to nearly $13 on Aug. 16-18, before falling back to around $10 on Aug. 30. Snap shares are trading at nearly $11 on the morning of Aug. 31.
Bed Bath and Beyond indicates that the closure of about 150 or more lower-producing stores is already underway. The company is also cutting planned capital expenditures for its fiscal year 2022 from $400 million to $250 million. New store openings and remodeling of existing stores are on hold for FY 2022.
Meanwhile, Bed Bath and Beyond states that it will "focus on strategic investments in technology, capabilities and services, and store maintenance." The company also says that it will expand "digital offerings and services" while also engaging in a "strategic reevaluation of original store remodel plans."
Snap indicates that its current projected year-over-year (YOY) quarterly revenue growth of 8% is well below its expectations earlier in the year. The company says that it has built a “2023 plan to generate free cash flow even in a low growth scenario.” In this vein, Snap signals that it must reduce its cost structure to avoid incurring significant ongoing losses.
Snap is discontinuing its investments in Snap Originals, Minis, Games, and Pixy, among other areas. The company is also winding down standalone applications Zenly and Voisey. Snap indicates that, despite laying off about 20% of its staff, the size of its team will be larger than it was at the same time last year.
Snap Inc. "Restructuring and Refocusing Our Business, August 31, 2022."
Bed Bath & Beyond Inc. "Business Strategy Update, August 31, 2022," Page 7.
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