Bed Bath & Beyond shares plunge on the stock market after CFO’s suicide

Bad news keeps piling up for Bed Bath & Beyond (BB&B). The American chain of domestic merchandise retail stores has recently experienced one crisis after another, the latest being the tragic suicide of its chief financial officer, Gustavo Arnal, who jumped to his death from his high-rise apartment in New York City. The suicide took place on September 2, and was confirmed by the company two days later. BB&B shares resumed trading on Tuesday, September 6 after the Labor Day holiday and immediately plunged 15% when the stock market opened.

Arnal’s death leaves BB&B without a key executive who was trying to stabilize a company shaken by a sharp drop in sales caused by inflation and changes in American consumer habits. BB&B’s financial woes have been exacerbated by its own misguided strategy and execution-related missteps.

Arnal was hired in 2020 from Avon, where he was involved in a successful restructuring of the company. At BB&B, he led negotiations to refinance the company’s debt, and developed a downsizing plan that closed 150 stores and laid off 20% of its workforce. The plan also included a potential capital increase, the announcement of which caused BB&B’s share price to fall sharply. Arnal sold some of his own BB&B shares prior to the announcement, which led to a class action shareholder lawsuit that named him as a defendant, accusing Arnal and other large shareholders of insider trading.

Arnal’s death leaves two senior management positions open at BB&B. The board of directors fired CEO Mark Tritton in June and installed independent director Sue Gove as interim CEO. Gove, who is only working part-time while the company searches for a permanent CEO, relied heavily on Arnal, the company’s second in command.

The 52-year-old Venezuelan-born executive died on September 2 when he fell from the 18th floor of his luxury apartment building in Manhattan’s Tribeca area. The building is known colloquially as the Jenga Tower because its irregularly placed floors resemble the Jenga block-stacking game. Arnal left no suicide note and didn’t say anything to his wife, who was in the apartment at the time. Police suspected early on that it was a suicide, and the New York coroner later certified it as such.

Interim CFO

The company assigned its Chief Accounting Officer, Laura Crossen, to temporarily take over the duties of the deceased CFO. Crossen took the accounting position, reporting to Arnal two months ago after her predecessor resigned.

Bed Bath & Beyond has been teetering on the edge of receivership due to financial setbacks caused by the pandemic, and then by inflation-related changes in consumer habits. News of changes to its shareholder structure, and seesawing negotiations to refinance its debt, have caused violent swings in its share price. BB&B became a meme stock – trading volume bounced up and down from hype on social media and online forums. The company’s death spiral continues as it reported a 26% drop in sales in the last quarter.

The company’s market capitalization stood at $690 million on September 2. It has lost two-thirds of its value in the last 12 months: it was worth more than $15 billion a decade ago. In 2019, activist investors took control of the company, blaming BB&B’s founders of failing to modernize stores and ignoring the shift to e-commerce.

When Mark Tritton came over from Target in November 2019 to take the reins at BB&B, he made a big bet on private-label branding, but customers were not convinced. Then the pandemic hit, followed by crippling supply chain bottlenecks. The BB&B board of directors ousted him in June, and several other executives followed him out the door.