Bed Bath & Beyond Inc., ranked no. 381 on the Fortune 500, is in the midst of meme stock mayhem, dire financial straits, executive upheaval, controversy, and tragedy.
Over the Labor Day weekend, the retailer announced that its CFO Gustavo Arnal, 52, passed away, stating the organization is “profoundly saddened by this shocking loss.” Local reports confirmed that Arnal fell to his death on Sept. 2 from a Manhattan skyscraper. His death was then ruled a suicide on Monday by New York City’s medical examiner. Arnal joined the company in May 2020 following a career in finance at Avon, Walgreens Boots Alliance, and Procter & Gamble.
“Laura Crossen, Bed Bath & Beyond’s chief accounting officer, will assume the role of interim chief financial officer,” a company representative told me in an email on Tuesday. “Laura has been with the organization for more than 20 years and we are grateful for her leadership. She has the full support of the organization, the board, and our outside advisors.”
The company filed a Form 8-K with the Securities and Exchange Commission naming Crossen the interim CFO. According to the report, her base salary will increase by $200,000, with an increase of her target annual bonus opportunity to 70%.
I asked Bed Bath & Beyond what Crossen’s priorities would be stepping into the CFO role. “Our leadership team, including Laura, is focused on supporting our teams, making sure our stores, customers and partners are supported and advancing the strategies shared last week,” according to the representative.
Bed Bath & Beyond announced on Aug. 31 that it had secured more than $500 million in new financing, planned to cut its workforce by 20% and close 150 “lower-producing” stores. The company also said it had eliminated the chief operating officer and chief stores officer roles. Bed Bath & Beyond reported in earnings ending May 28 a net loss of $385 million, compared to a loss of $51 million the same time last year. Sue Gove, an independent director at the company, became interim CEO, replacing Mark Tritton as CEO.
In addition to financial challenges, a class action lawsuit was filed in the U.S. District Court for the District of Columbia on Aug. 23, listing the lead plaintiff as Pengcheng Si. It alleges that from March 2022 through August 2022, Arnal; Ryan Cohen, an activist investor; JP Morgan Securities LLC; and others, “engaged in a fraudulent scheme to artificially inflate the price of BBBY publicly traded stock,” according to the court filings I reviewed.
“As previously noted in our 8-K filed Aug. 31, the company is in the early stages of evaluating the complaint but based on current knowledge, the company believes the claims are without merit,” the Bed Bath & Beyond representative told me.
Here’s what we know about the chaotic summer preceding this past weekend’s tragedy:
Aug. 16—Bed Bath & Beyond shares jump as much as 78.8% after legendary meme stock investor’s latest bet: BBBY surged more than 70% on Aug. 16 as retail investors on social media gravitated to the stock after a filing revealed activist investor Ryan Cohen was holding steady on his bet.
Aug. 16—How a 20-year-old USC student netted $110m from a Bed Bath & Beyond stock dump at exactly the right time: By 2 p.m. ET on Aug. 16, the share price of BBBY dropped from more than $26 a share to below $20 in a matter of minutes. But the 20-year-old USC student posted on Reddit that he had exited his $130 million position before noon.
Aug. 18—Ryan Cohen drives a 27% drop in Bed Bath & Beyond shares by selling his entire stake: Five months after disclosing a stake in Bed Bath & Beyond, activist shareholder Cohen tapped out, sparking a selloff in the shares of the home goods retailer.
Aug. 19—Bed Bath & Beyond shares plummet another 43% after Cohen exits the company: Shares of BBBY nosedived 43% at market open on Aug. 19, as investors fled following news that GameStop chairman Ryan Cohen had indeed sold all of his holdings in the meme stock.
Aug. 19—Some Bed Bath & Beyond suppliers halt shipments on unpaid bills: Several of the firms that provide credit insurance or short-term financing to vendors revoked coverage of the company.
Aug. 19—No respite for meme stock investors as Bed Bath & Beyond worries whether it can pay its bills: Just a day after its market cap lost a fifth of its value following a massive run-up in price, the meme stock popular on Reddit board WallStreetBets was set to plunge.
Aug. 22—Bed Bath & Beyond leads rout in meme stocks as mania fizzles: BBBY tumbled 16%, marking a three-day drop that erased 60% of its market value, after a report some suppliers were restricting or halting shipments altogether after the company fell behind on payments.
Aug. 23—A class action lawsuit filed in the U.S. District Court for the District of Columbia: Lead plaintiff Pengcheng Si alleges Ryan Cohen approached Gustavo Arnal about a plan to control shares of the company so they could both profit.
Aug. 24—Bed Bath & Beyond shares soar once again after it taps a new financing source: A report revealed the troubled home goods retailer has secured debt financing. The debt financing process is being conducted by JPMorgan Chase.
Aug. 31—Bed Bath & Beyond shares are plunging on its plans to close 150 stores: Traders on Reddit’s r/WallStreetBets forum were hit especially hard, with one claiming to have realized a $1.1 million net loss with their investment.
If you or someone you know is contemplating suicide, you can contact the National Suicide Prevention Lifeline by dialing 988 or 1-800-273-8255.
See you tomorrow.
Upcoming events: This month, the Fortune CFO community will meet in person in Chicago and Dallas for two in-depth dinner conversations to delve into the new leadership strategies CFOs must embrace. CFOs, click here to apply to join us in Chicago at Sepia on September 22 or click here to apply to join us on September 29 at The Mansion Turtle Creek in Dallas. Please note that attendance is complimentary and subject to approval. See you there!
Morgan Stanley’s E-Trade released data from its monthly sector rotation study. The top three sectors in July and August were consumer discretionary (nonessential goods and services, like cars and entertainment), energy, and materials. The results are based on the trading platform’s customer notional net percentage buy/sell behavior for stocks that comprise the S&P 500 sectors. Both consumer discretionary and materials increased between July and August, while energy decreased, according to the report.
Courtesy of E-Trade
“‘Poison’ Ivy Zelman—the analyst who predicted the 2008 housing bust—sees U.S. home prices falling in both 2023 and 2024. Here’s how much,” a new Fortune report, delves into Zelman’s predictions. The analyst’s outlook “amounts to an 8.8% drop in U.S. home prices between 2022 and 2024; historically speaking, that would make this one of the three sharpest home price drops ever recorded. The other two being those from the Great Depression and Great Recession,” according to the report.
Jorge Garcia Martell was named CFO at OneSpan (Nasdaq: OSPN), a digital agreements security company, effective Sept. 6. Martell replaces Jan Kees van Gaalen, who concluded his role as the company’s interim CFO. Martell most recently served as CFO and treasurer at Extreme Reach, Inc., an omnichannel creative logistics company. Before assuming the CFO role, Martell served as Extreme Reach’s VP of finance and corporate controller. Prior to Extreme Reach, he was the assistant corporate controller, director of finance and treasurer at Sapient Corporation. Before Sapient, Martell held leadership roles at ABM Industries, Inc., and KPMG LLP.
Perry G. Del Vecchio was named CFO at Alico, Inc. (Nasdaq: ALCO), an agriculture and land management company, effective Sept. 6. Del Vecchio will be responsible for all corporate finance, treasury and accounting functions of the company and will report directly to John Kiernan, the president and CEO. Del Vecchio served as a VP and the controller for Lexyl Travel Technologies in West Palm Beach, Florida. He spent most of his career in financial management positions within the Hertz organization.
“Sharply lower commodity prices, a stronger dollar, and large improvements in supply-chain disruptions all suggest that goods price inflation will continue to abate.”
—Jan Hatzius, Goldman Sachs’ chief economist, said in a Monday research note that he believes a soft landing is still possible, even if the flight path is bumpy, Fortune reported.
This is the web version of CFO Daily, a newsletter on the trends and individuals shaping corporate finance. Sign up to get it delivered free to your inbox.