Timeline of a Crisis: Bed Bath & Beyond fumbles inflated stock price and leadership shuffle

After a top-five shareholder reshuffled Bed Bath & Beyond’s leadership deck before cashing out, the home goods retailer’s stock prices soared before crashing, with a class action lawsuit and a death as collateral damage.

(Credit: Getty Images)

March 6

Gamestop chairman and “meme stock” leader Ryan Cohen took a 9.8% stake in Bed Bath & Beyond through his investment firm, RC Ventures, making him a top-five shareholder. 

In a letter to Bed Bath & Beyond’s board of directors, RC Ventures made several business suggestions for the struggling retailer. 

“We suspect Bed Bath will benefit more at this stage by bringing simplicity to its plan: Finish fortifying the infrastructure, make remaining store fleet improvements, and prioritize core assortment and inventory fixes to meet near-term demand,” RC Ventures said. 

March 25

As part of a “cooperation agreement” with Cohen, three of RC Ventures’ directors joined Bed Bath & Beyond’s board of directors, the latter said in a statement.  

June 29

The retailer’s sales plunged to $1.46 billion in Q1, compared to $1.95 billion the year prior. CEO Mark Tritton was replaced with Bed Bath & Beyond independent board director Sue Gove, who assumed the role on an interim basis. 

“We must deliver improved results. Our shareholders, associates, customers, and partners all expect more,” Gove said in a statement. 

August 17

Bed Bath & Beyond’s meme stock increased over 300% in August, led by members of the r/wallstreetbets reddit page

August 19

RC Ventures said in a SEC filing that it had sold its Bed Bath & Beyond stake for $178 million. In total, Cohen made $68.1 million in profit from his sale, according to Bloomberg. The following day, shares of the stock fell 40.5%

August 23

Bed Bath & Beyond shareholder Pengcheng Si filed a class action lawsuit against CFO Gustavo Arnal, as well as Cohen and JP Morgan Securities. Si, who claimed to have lost over $106,000 on an investment in Bed Bath & Beyond, alleged Arnal was involved in a “pump and dump” scheme. 

“The company is in the early stages of evaluating the complaint but based on current knowledge the company believes the claims are without merit,” Bed Bath & Beyond spokesperson Julie Strider told Yahoo Finance via email

August 31

As part of a turnaround plan, Bed Bath & Beyond announced it had started closing about 150 of its “lower producing” stores. The company also said it would lay off 20% of corporate and supply-chain staffers, and that it had secured more than $500 million in new financing, including a $375 million loan from investment firm Sixth Street Partners. 

“We are embracing a straightforward, back-to-basics philosophy that focuses on better serving our customers, driving growth, and delivering business returns,” Gove said in a statement. 

The retailer also continued to make executive leadership changes, eliminating the COO and chief stores officer roles.

September 5

One day after falling to his death from a New York skyscraper known as the “Jenga Tower,” Arnal’s death is ruled a suicide by the New York City medical examiner’s office. 

In a statement, the retailer issued a statement mourning Arnal. “Gustavo will be remembered by all he worked with for his leadership, talent and stewardship of our Company,” said Harriet Edelman, independent chair of the Bed Bath & Beyond board of directors. 

September 6

Bed Bath & Beyond shares crashed 15% in pre-market trading. Over the past year, the company’s stock lost 70% of its value, CBS News reported

Conclusion: Miss

Despite months of negative headlines and stock price instability, Bed Bath & Beyond was remarkably inactive communicating with customers and investors. The company abruptly shuffled and chopped executive leadership positions with little to no explanation as to why, and revealed a turnaround strategy that left analysts more worried than optimistic

Takeaways 

1. Bed Bath & Beyond revealed a distinct lack of crisis communications. The retailer did not release official statements to stakeholders in response to Si’s lawsuit and Cohen’s abrupt exit, giving investors more reason to worry when stability was of paramount importance. 

2. Although the retailer’s turnaround strategy did provide updates on how the company aims to alleviate four years of financial uncertainty, such as fixing its balance sheet through a loan, the company is still struggling to convince customers to come back through its doors. 


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