What happened

Bed Bath & Beyond (BBBY) investors had today circled on their calendars, as the struggling retailer promised last week to give the investing community a business and strategic update this morning while the company is facing a liquidity crisis and its sales and profits are tanking.

Ironically, the update comes after the stock skyrocketed this month, thanks to a short squeeze generated by meme stock traders on platforms like Reddit's WallStreetBets.

Today, however, investors didn't like what they saw in the strategic update, and the stock was down 20.4% as of 10:59 a.m. ET.

So what

As the market generally expected, Bed Bath & Beyond announced a slew of cost-cutting measures and a new financing package. The company said it would close 150 underperforming locations, and it plans to lay off 20% of its workforce across both corporate and the supply chain. Management said those moves would reduce its selling, general, and administrative expenses by $250 million for the current fiscal year, and it also said it would cut capital expenditures from $400 million to $250 million this year, helping to shore up its liquidity.

The company also announced more than $500 million in new financing from Sixth Street Partners and JPMorgan Chase, which will help the retailer reassure vendors that it can pay its bills. Management also plans a secondary stock offering of up to 12 million shares, which would raise roughly $120 million at the current stock price. 

In its second-quarter preliminary results, comparable sales fell 26%, leading to revenue of $1.45 billion, which was below the analyst consensus at $1.5 billion, and it said it expected a free cash flow loss for the quarter of $325 million.

Now what

This morning's announcements show the company is taking steps in the right direction, but given the rapid cash burn in the first half of the year, it may not be enough to stabilize the business, especially if the macroeconomic environment remains challenging.

The update also seemed to deflate WallStreetBets traders who were hoping for a bigger announcement, like the sale of BuyBuyBaby. Management did say that a strategic review found that BuyBuyBaby was more valuable as part of Bed Bath & Beyond.

Overall, given the inflated stock price and the dismal second-quarter results, it's not surprising to see the stock falling today.