Bed, Bath & Beyond and Snap Inc. announced significant cuts in staff Wednesday, according to the Wall Street Journal (WSJ).
Bed, Bath & Beyond has suffered over the last few days with stocks tumbling as the retailer explained -$325 million in deficits during the second quarter of 2022, not to mention the first quarter also reporting -$488 million. Additionally, the latest report reveals the retailer’s cash burn of $800 million in the last six months.
Wednesday, the home goods retailer announced it was cutting staff by one-fifth (20%), closing 150 of its flagship stores, and ready to sell up to 12 million shares, representing 15% of the outstanding shares. The announcement sent stocks into a nosedive, prices plummeting to below $10 per share.
Lenders are willing to help Bed, Bath & Beyond by offering a lifeline. The company increased its liquidity by roughly $500 million by expanding its asset-backed revolving credit and raising a $375 million “first-in-last-out” financing, according to the WSJ.
Likewise, Snap Inc, the parent company of Snapchat, is laying off 20% of its 6,400 employees and closing down several projects in the latest attempt to curb spending. Since the beginning of 2022, Snap stock prices had plummeted by 79% ahead of Wednesday’s announcement.
“It has become clear that we must reduce our cost structure to avoid incurring significant ongoing losses,” Snap Chief Executive Evan Spiegel said in an internal memo. “We must now face the consequences of lower revenue growth and adapt to the market environment.”
The larger picture at Snap is tied to online advertising woes and a third-quarter revenue increase of only 8% year to year. Without a significant turnaround in September, which would be Snap’s lowest growth rate on record – a humbling predicament for the social platform that had boasted 66% growth year over year since going public in 2017.