Bed Bath & Beyond came back from its horrific Labor Day weekend break and is trying to pick up the pieces.
After the apparent suicide death of its CFO following news that he, the company and others were being sued for $1.2 billion for alleged stock manipulation, the troubled Big Box retailer started its latest triage efforts on Tuesday morning. While there is no confirmed connection between the death and the lawsuit their timing just days apart at least raises suspicion that they are related.
This came as its stock – already the victim of a wild ride on Wall Street that has seen multiple swings in both directions over the past five weeks – continued its downward slide, down more than 15% at mid-morning. This puts its shares at just half the price they traded at only five days ago and at $7.33 way off its August high of close to $30.
Following the death of Gustavo Arnal, which is being called a likely suicide, Bed Bath named Laura Crossen, its chief accounting officer as interim chief financial officer. She is a long-time BBB company employee, having joined the company in 2001 and rising through the financial ranks. She was previously at another retailer, Delia’s, and prior to that spent seven years at Ernst & Young.
This executive change comes at a perilous time for the company, which announced a new strategic plan on an investor call — that featured Arnal — only last week that included store closings, significant spending cuts and employee layoffs as well as a plan to issue new shares to raise additional cash beyond the $500 million in new financing it secured.
News also began to circulate more wildly over the weekend that a lawsuit had been filed in late August by a group of investors claiming that Arnal and former shareholder Ryan Cohen were involved in a “pump-and-dump” scheme to inflate the price of its shares for their benefit.
According to a Wall Street Journal report, “the company responded last week that it believed the suit is without merit.” BBB over the weekend told Warrensreport it had no further comment on the suit or Arnal’s death, beyond expressing sadness and saying that it asks “that you please respect Mr. Arnal’s family and their privacy at this time.”
The Journal said Cohen, the RC Ventures head who bought more than 10% of Bed Bath this spring only to suddenly sell it in late August making a significant profit, “had no comment” through a spokesperson. The plaintiff on the lawsuit didn’t respond to requests for comment, the WSJ said.
As all of this unfolds as the retailer is in the midst of its turnaround plan that it hopes will keep it out of bankruptcy proceedings. With more than $1 billion in cash and financing, it appears it has sufficient finances to make it through at least the next several quarters, including the critical holiday season. But this latest news has to be viewed as troubling by the company’s vendors, many of whom have said they are not being paid on a timely basis and have said off-the-record they remain quite worried about doing business with BBB.
Certainly the developments this weekend – tragic both personally and on a business level – cannot help.