In our previous article, we highlighted the value of management’s ability to make operational changes with minimal value destruction, as key to Bed Bath & Beyond's (NASDAQ: BBBY) valuation on a go-forward basis. Subsequent to our article, management outlined a cost cutting plan which, in our opinion, can be sub-divided into two “action items” - namely, human resource re-allocation and real estate and logistics optimisation. As a follow-up to our previous article, we will discuss the contents of the plan.
According to the press release on August 3, 2017, the company stated that:
… 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.
