Bed Bath & Beyond, a retail chain, and Snap, a social networking company, both announced significant layoffs on Wednesday as soaring inflation and a faltering economy hit big US businesses hard.
Bed Bath & Beyond, the most popular meme-stock among novice Reddit traders, recently revealed intentions to liquidate 150 of its approximately 900 shops and lay off 20 percent of its corporate and supply chain personnel.
The big-box retailer, long dubbed a “category killer” for home and bath products, has seen its fortunes wane. CEO Mark Tritton was ousted in June after first-quarter sales fell by 25%.
He was temporarily replaced by Sue Gove, an independent board director, who was recruited by the corporation.
According to Gove, the shop is “continue to see substantial good momentum” and wants to expand on its “strong tradition as a retailer,” as he said on Wednesday.
On a conference call, she said, “While there is still much work to be done, our road map is clear and we’re sure that the big adjustments we’ve made today will have a good influence on our performance.
In addition, the store stated it had received $500 million in additional funding and that it planned to raise money by issuing new shares. However, investors were unimpressed with the shop’s strategic strategy, and shares plunged as much as 25% in early trade.
Investors who had been cheering the stock on the Reddit community WallStreetBets responded with a combination of stoicism and grief.
“I just wanted to earn money with little work.” Why do I have to endure this pain? why?’ One forum member posted something.
Bed Bath & Beyond provided an update on Wednesday in which it also predicted a bigger-than-expected 26 percent decline in same-store sales for the second quarter and said it would keep the buybuy Baby division, which it had previously placed up for sale.
GameStop Chairman Ryan Cohen, the largest shareholder in the firm until this month when he sold out of his 9.8% position, which sent shares falling, had supported attempts to sell buybuy Baby.
Bed Bath & Beyond used to be renowned for offering many customers 20% off coupons, but in recent years it has changed its emphasis to private-label goods, including kitchenware under the Our Table brand.
According to executives on a conference call, the chain is now abandoning that strategy, getting rid of three of its private label brands, and placing a higher priority on national brands like Calphalon, Ugg, Dyson, and Cuisinart.
According to executives, Bed Bath & Beyond will eliminate its chief operating officer and chief stores officer positions and reduce around 20% of its corporate and supply chain personnel. In total, the company employs about 32,000 people.
In the meanwhile, Evan Spiegel, the CEO of Snap, informed colleagues in a message on Wednesday that ad revenues were falling short of initial expectations and disclosed plans to restructure and lay off around 20 percent of the company’s 5,600 employees.
Unfortunately, Spiegel stated, “Given our present reduced pace of revenue growth, it has become evident that we must decrease our cost structure to prevent sustaining large recurring losses.”
According to the firm, Snap will abandon ambitious initiatives like mobile games and novelties like a flying drone camera in order to save an estimated $500 million a year in expenditures.
Shares of Snap increased up to 15% in early trade as a result of investor support for the decision.
Spiegel said that Snap was reorganising its operations to concentrate on augmented reality, community expansion, and revenue growth.
Spiegel warned that anything that doesn’t help these three areas “would be withdrawn or get considerably reduced funding.”
Last October, Snap said that a privacy regulation that went into effect on Apple’s iPhones was hurting its ad revenues, which caused investor concerns about the app’s growth prospects.
The majority of social media sites depend substantially on advertising money, which is one of the reasons Facebook has been a vocal opponent of Apple’s most recent privacy control measures.
There hasn’t been much positive news from Snap since the firm reported its first-ever profitable quarter in the last quarter of 2021.
After the firm said in an SEC filing that the “macroeconomic environment has worsened farther and quicker than expected” and that it would not fulfil its own sales and profit projections in the time, Snap shares lost over half of their value on May 24 and fell by 43 percent.
On July 22, when Snap reported quarterly earnings that below expectations, shares plummeted by a further 39%.
More than 5,600 individuals now work for Snap, and the firm claims that even after firing over 1,000 workers, its team would still be greater than they were a year ago.
Snapchat is a platform for video messaging, and after a post has been seen by a recipient, it is instantly deleted.
When the epidemic hit and people were spending more time online at home working and studying, Snap, like most other social media firms, saw growth. Late September of 2021 saw the highest price of Snap shares, which was over $83 a share.
After the layoffs were announced, Snap shares increased by almost 10% in lunchtime trade on Wednesday, reaching $11 per share.