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Bed Bath & Beyond announced Tuesday that as part of its efforts to reduce costs, it will cut its corporate staff by 7% and eliminate the chief operating officer role.
As part of this decision COO Eugene Castagna, who also held the title of president, will leave the company. The stock dropped more than 1% after the news.
"While decisions that impact our staff are difficult, today's action is an important step in simplifying our corporate structure and ensuring our resources are aligned with the business we are managing today," Bed Bath & Beyond's interim CEO, Mary Winston, said in a statement. "We remain confident in the underlying business and our ability to leverage the strength of the Bed Bath & Beyond brand and our lasting connection with customers to deliver on our near-term priorities and transform the Company."
Other positions eliminated include vice presidents, directors, managers and professional staff.
On an earnings call in July, Winston had outlined her four key initiatives: resetting cost structure, refining organizational structure, stabilizing and growing sales, and optimizing assets. Tuesday's move looks to achieve these goals.
The company reiterated that it expects its earnings per share to fall to a range of $2.11 to $2.20 for the second quarter. The company had announced its lowered forecast in its last earnings call. The estimate excludes restructuring costs.
Bed Bath & Beyond expects earnings per share to improve, with the majority of the gains earned in the second half of the fiscal year.
The organizational changes will result in an estimated $30.7 million in pretax net savings, while restructuring will cost about $12 million. The company has a market value of around $1.1 billion.
A trio of activist investors has been pushing for changes at the company since March and has made efforts to replace its entire 12-person board by leveraging their stakes. Legion Partners Asset Management, Macellum Advisors and Ancora Advisors have a collective 5% stake in the company and said the big-box retailer has fallen behind as more customers turn to online shopping. The activists are pushing for Bed Bath & Beyond to consider sales of underperforming assets such as Buy Buy Baby. Its stock rocketed more than 22% after the March news.