Bed Bath & Beyond has appointed chief accounting officer Laura Crossen as interim chief financial officer to replace Gustavo Arnal, whose death at the end of last week adds to a cloud of financial uncertainty for the business and further complicates its plans of recovery.
According to the New York Police Department, police found Arnal, 52, unconscious with injuries showing he had fallen from the 57-story Jenga residential tower in Manhattan. The medical examiner’s office has ruled Arnal’s death a suicide, and police say an investigation is underway.
News of Arnal’s death came just days after Bed Bath & Beyond announced it would close around 150 of its namesake stores and cut its workforce by 20% as it tries to repair its beleaguered business. The company also said last week that it was considering selling more of its stock to shore up its finances and had more than $500 million in new funding in place.
“The underlying factors were bad before,” said Allen Adamson, co-founder of marketing consultancy Metaforce. “This (tragedy) only makes a difficult situation worse.”
Arnal himself, who joined the company in May 2020 after holding senior roles at Avon, Walgreens Boots Alliance and Procter & Gamble, was facing a lawsuit accusing him and activist investor Ryan Cohen of conspiring since March to raise the price of Bed Bath & Beyond stock, then dump stocks for a profit. He also accused Cohen of making a false record and manipulating the timing of the disclosure of the sale of most of his stock.
Pengcheng Si, which filed a lawsuit in August against Arnal, Cohen, Bed Bath & Beyond and its bankers, could not be reached for comment on Tuesday.
Bed Bath & Beyond said it was in the early stages of assessing the complaint, “but based on current knowledge, the company believes the claims are without merit.” He revealed in a separate filing in August that Arnal sold about 55,000 shares for $1.4 million in six different transactions that still left him with more than 255,000 shares.
Founded in 1971, Bed Bath & Beyond had for years enjoyed its status as a big-box retailer that offered a huge selection of linens, towels and gadgets unmatched by department store rivals. He was among the first to introduce shoppers to many of today’s household items like the air fryer or the single-serve coffee maker, and his 15% to 20% coupons were ubiquitous.
But over the past decade, Bed Bath & Beyond has struggled with weak sales, largely due to its messy assortments and lagging online strategy that have made it difficult to compete with Target and Walmart, which both upgraded their home departments. with better quality linens and bedding. Meanwhile, online players like Wayfair have been luring customers in with affordable, on-trend furniture and decor items.
In late 2019, Bed Bath & Beyond tapped Target executive Mark Tritton to take the helm and turn sales around. Tritton quickly reduced coupons and began to introduce store brands at the expense of national labels.
But the pandemic, which happened soon after he arrived, forced the retailer to temporarily close its stores and he was never able to use the health crisis to pivot to a successful online strategy as d others did, analysts said. And while many retailers were struggling with supply chain issues, Bed Bath was among the most vulnerable.
During last year’s crucial holiday shopping season, stores ran out of many of their top 200 selling items, including kitchen appliances and personal electronics, recording sales of 100 million dollars, the company said earlier this year. The retailer ousted Tritton in June after two consecutive quarters of disastrous sales.
“He’s gone too far, too fast,” said Neil Saunders, managing director of GlobaData Retail. “He didn’t think of the client.”
Then came turbulence with the retailer’s shares, which made a monstrous run from $5.77 to $23.08 in just over two weeks in August. The trading was reminiscent of the meme-stock craze of last year, when out-of-favour companies suddenly became the darlings of small-pocketed investors.
But the stock fell back to earth after Cohen, the billionaire co-founder of online pet products retailer Chewy Inc., which bought a nearly 10% stake in Bed Bath & Beyond in March, sold all of its shares.
The company is now led by board member and retail consultant Sue Gove, while a recruitment firm seeks a permanent CEO. Last week, he announced that the chief operating officer and stores manager had left.
Bed Bath & Beyond executives say they are returning to the company’s original strategy of focusing on national brands instead of its own private label brands, getting rid of a third of its private label brands. It would also stop taking the “in-stack” approach to merchandising and work more closely with its suppliers.
But Saunders and other analysts fear suppliers may demand tougher financial terms because they worry about the health of the business. He thinks the company is just waiting for the time before a bankruptcy filing.
Shares of the company fell more than 17% in afternoon trading to $7.12. Stocks have lost nearly 70% of their value in the past 52 weeks.
The National Suicide and Crisis Lifeline is available by calling or texting 988. There is also an online chat at 988lifeline.org.
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