Topline
Shares of brick-and-mortar retailer Bed Bath & Beyond surged higher on Thursday following the disclosure of several insider purchases—including new CEO, Sue Gove—as top executives at the company remain optimistic about a turnaround despite plunging sales.
Investors are hoping new leadership can help turnaround the business and reverse recent stock … [+]
Key Facts
Bed Bath & Beyond’s stock jumped nearly 22% after news that several company executives bought up tens of thousands of shares, a move viewed by investors as a vote of confidence that the struggling retailer can be saved from going out of business.
Interim CEO Sue Gove purchased 50,000 shares—worth roughly $230,000—shortly after taking the top job last week, according to new regulatory filings late on Wednesday.
Gove replaced CEO Mark Tritton, who had been in the role since 2019 but was ousted by the board on June 29 after yet another quarter of dismal sales results, with the company’s stock price plunging to less than $5 per share.
Two additional board members, Harriet Edelman and Jeff Kirwan, each bought 10,000 shares at under $5 per share, according to filings.
While investors cheered the recent moves by Bed Bath & Beyond’s leadership, Wall Street analysts have been sounding the alarm that the retailer is now in a precarious financial position, with sales in the most recent quarter plunging by roughly 25% from a year ago.
Bank of America warned that “liquidity is now our top concern after the company burned over $500 million” in the previous quarter, with just over $100 million in cash left on its balance sheet.
Key Background:
Despite ongoing efforts to improve the business, Bed Bath and Beyond’s stock is still down over 62% so far this year—after falling roughly 18% in 2021—amid a string of bad financial results. A former Target executive, Tritton had spent the last three years trying to turn the business around by closing underperforming stores and launching new private-label brands. With the struggling retailer still facing plummeting sales, however, that strategy has clearly not worked, most Wall Street analysts agree, while also predicting further challenges ahead.
Big Number: $2.7 Billion
That’s how much Bed Bath & Beyond’s market value has declined in the last year, from $3.1 billion to just over $400 million today.
What To Watch For:
The company continues to face pressure from activist investor Ryan Cohen, cofounder of pet food company Chewy and chairman of video game retailer GameStop. In March earlier this year, Cohen took a nearly 10% stake in Bed Bath & Beyond, reaching an agreement to expand the company’s board and explore a sale of its baby-focused business, Buybuy Baby.
Further Reading:
Bed Bath & Beyond Replaces CEO, Falls Short On Earnings (Forbes)
Bed Bath & Beyond Stock Rises After New Agreement With GameStop Billionaire Cohen (Forbes)
Source: https://www.forbes.com/sites/sergeiklebnikov/2022/07/07/bed-bath-beyond-stock-jumps-over-20-after-new-ceo-buys-50000-shares/