Bed Bath & Beyond CFO Gustavo Arnal (inset) – Photo: Wikimedia Commons/Tony Webster
Things go from bad to worse at Bed Bath & Beyond
The death of Bed Bath & Beyond chief financial officer Gustavo Arnal last Friday has shocked the company and the retailing world. It has also created more uncertainty within the retailer’s leadership ranks just days after trying to sell stakeholders on a latest plan to turn the business around.
Mr. Arnal died by suicide on Friday after falling from the eighteenth floor of his apartment building in New York City. Earlier in the week he had briefed analysts and investors on Bed Bath & Beyond’s plans to restructure its business including securing commitments for $500 million in new financing through a $375 million loan with Sixth Street Partners and by expanding its $1.13 billion asset-backed revolving credit facility.
Bed Bath & Beyond also announced a restructuring that included closing 150 of its namesake stores and cutting 20 percent of its corporate and supply chain staff. The retailer also reorganized its c-suite, with its chief operating officer and chief stores officer leaving the company.
A Wall Street Journal article points out that the loss of its CFO, COO and CSO follows the departures of former CEO Mark Tritton and chief merchandising officer Joel Hartsig on June 29.
Last week’s announcement that the retailer had secured further credit was thought to have given Bed Bath & Beyond some breathing room after reports had surfaced that some vendors had pulled back from working with the company over concerns about being paid.
Bed Bath & Beyond was in the process of trying to close the books on the quarter ending Aug. 27. It’s unclear whether the company will seek an extension following Mr. Arnal’s death.
Mr. Arnal’s psychiatric history is publicly unknown at this time as is the exact motivation that led him to take his own life.
It’s clear that he was under a great deal of pressure, Business Insider reports. He was being named in a federal class action lawsuit alleging that he and activist investor and GameStop chairman Ryan Cohen engaged in a “pump and dump” scheme to artificially drive the price of Bed Bath & Beyond’s stock up before selling their shares in the company.
Mr. Arnal sold more than 42,000 shares with an estimated value of more than $1 million. Mr. Cohen announced plans to sell his entire 9.8 percent stake in Bed Bath & Beyond.
- Bed Bath & Beyond Faces Leadership Gap After Executive’s Death – The Wall Street Journal
- Bed Bath & Beyond CFO who died after falling from NYC high rise was subject of insider trading and fraud lawsuit just before death, documents show – Business Insider
- Bed Bath & Beyond Inc. Announces Strategic Changes to Strengthen its Financial Positioning, Drive Growth and Better Serve Customers – Bed Bath & Beyond
- Will Bed Bath & Beyond’s new turnaround plan work any better than the previous one? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: What do you do now if you are Bed Bath & Beyond’s board of directors? How do you think recent developments are affecting employees of the company and its vendors?
Poll
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Dave Wendland
Vice President, Strategic RelationsHamacher Resource Group
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
There’s no doubt that these recent tragic circumstances will make a difficult situation even worse. Management must carry on for the sake of its employees, shareholders and customers. The very best move management can make is to communicate regularly and be transparent and honest about how they go forward.
Keep calm and carry on might be their only option. We should ask whether the store is relevant, a remnant of a bygone bricks and mortar age, or if they should remain as part of the re-birth of bricks and mortar. If I were them, I’d liquidate – they’ve lost whatever mojo was left.
Well, I’m not buying sheets, towels, dishes, or flatware without feeling them first, (and returns for such items are always going to be uneconomic for e-commerce merchants) so these core categories have to have a brick-and-mortar home. Like Target, or Crate & Barrel, or IKEA. Amazon FBA in the housewares department has become too overwhelmed with copycat merchandise from fly-by-night offshore companies to be a legitimate player in this category.
It’s tempting for the Bed Bath & Beyond board and senior leadership to go into “crisis management” hyperdrive, but Mr. Arnal’s death must be treated first as a human tragedy. Equating his suicide — however it was motivated — with the other executive departures and other turmoil at Bed Bath & Beyond doesn’t offer much dignified closure to Mr. Armal’s family and close colleagues.
I agree, Dick. Acknowledgement on the personal front must be followed by decisive action on the business front.
Well said, Dick. Both issues require deftness and perspective as leadership proceeds.
I remember reading about this over the weekend and thought, how is this situation going to get better? I really hope that the management communicates to their store associates, as well as to the press, about what the next steps will be.
This is incredibly sad and one can have nothing but sympathy for Mr. Arnal’s family and friends. However Bed Bath & Beyond’s finances are in a total mess and it needs a CFO to help sort them out. As harsh as it sounds, they need to fill that role as soon as possible. They also need a permanent CEO. Failure to address these things will undermine already low confidence in the business.
Agreed. But the real question is what talented managers would step into this situation.
Very few, which is why they’ve had to appoint internally for the CFO role!
My heart is broken for the surviving family members of Mr. Arnal’s tragic death. And this sympathy certainly extends to the Bed Bath & Beyond family and team members.
Moving on from such an unfortunate incident would be difficult for any organization — and it is especially devastating for Bed Bath & Beyond. Honest communication is the first step toward healing.
The company’s situation aside, mental health challenges should become front and center across the country. Human fragility is ever-present and recognizing how and where to lead those suffering toward care has never been more crucial.
This is very tragic news. My sincere condolences to Mr. Arnal’s family, friends and colleagues. I think transparent and consistent communication – to shareholders, vendors and associates – is critical in the short run. In the long run, I believe more investments in differentiated assortments are key to finding stability and, eventually, growth.
Begin preparations to declare bankruptcy and start to hold cash so you’re well positioned for post DIP operations. Cash is king,
Too much malfeasance and incompetence happened. CFOs don’t just jump out of windows for no reason.
Those remaining in senior positions must step up to the plate and use their leadership skills to keep things from getting even worse. They need to work with their staff and put a short term plan in place and move on. They then need to work on and execute a longer term plan that is realistic and achievable. That’s what leaders are supposed to do in good times and in bad.
We know so little about mental health and trying to peg causal reasons after a suicide is pointless. Fill the position, keep moving forward messaging employees about what you are doing to right the ship.
Perfect response.
Tragic is an understatement, but solid companies don’t lose five C-suite officers in less than three months. The board needs to hire a CEO and CFO pronto if they want to salvage the company or look at bankruptcy and re-build the brand using a different set of strategies.
Suicide is a symptom of an illness that we don’t like to discuss. Survivors struggle with how to rationalize what makes a person do this. I think it’s essential for Bed Bath & Beyond, and honestly all of us on the outside, to avoid trying to conjecture about what triggers caused Mr. Arnal to take such a drastic measure. It does a disservice family and to his memory. Decisions about the business and what’s next can wait a day. Bed Bath & Beyond is a mess. We’ve been talking about that in this space for a while.
When this happened at a company where I worked, HR took the opportunity to educate our staff about mental illness and make sure they knew what resources were available for them should they feel the need to use them. That’s the proper approach.
Too bad public companies don’t have the leisure to say, we’re going to shut down for 90 days to regroup and figure out our go-forward plan. With very few senior leaders, everything feels like a Band-Aid right now.
The situation at Bed Bath & Beyond has grown increasingly challenging. There is a clear human tragedy that needs to be recognized, and at the same time the business is in dire need of an authoritative and influential CFO to lead the team through these tumultuous times.
Plenty of passionate, hard-working, and dedicated employees at Bed Bath & Beyond, both at the corporate level and stores, deserve clear and transparent communication on the CFO crisis and the turnaround and transformation plans. The times call for transparency and clear objectives in very choppy and hazardous waters.
The longer Bed Bath & Beyond continues, the bet for any entity that will provide financing for the chain is that, eventually, they will file Chapter 11. The financing company will pick up cheap assets.
If I was a board member, the first thing I would do is to issue a statement extending the usual platitudes to Mr. Arnal’s family. The next thing I would do is make a significant — and very public — contribution to the National Suicide Hotline or a similar group. This is the right thing to do on a human level and has the added benefit from distancing Arnal’s personal demons from the plight of the company. Next, I wouldn’t panic. I would actively see if any top executive talent would be willing to take on BB&B (not all that likely) or start quietly look at Chapter 11 options.
I think things just got worse. There’s really not much more that needs to be said.
Such sadness. When my colleague had passed away at a previous firm I worked at, there was little room to move on until the issue was addressed. During meetings we had a moment of silence.
The board and remaining leaders at the company are talented enough to first grieve for their fallen colleague and then take appropriate steps to shore up their business direction. Half the board is made up of folks from banking and finance institutions, others from companies like The Gap, Stitch-Fix, and other well known retailers. There are folks at the company that know what they’re doing and will be able to move on from whatever mistakes of the past. Moving forward from here will only make this a stronger company.
Remaining leadership must be an open book and in constant communication with employees as to future direction and for every step they plan to take, especially considering their tragic loss. This includes being on site at store locations. The challenges ahead cannot be driven solely from inside the walls of the corporate HQ, as tough as it is to schedule room for travel. The larger employee base serving customers can make or break what remains of this company.
This is the most tragic event in a string of very bad news for BBY. Every cohort — associates, board, partners, vendors, customers, analysts and the general public — has been impacted. A SWAT team of seasoned, humane-minded senior leaders needs to be brought in to stabilize and console in the immediate-term and determine a viable way forward in the near-term.
Clearly the environment has been challenging and high pressure. I hope that all employees don’t get painted by the same brush, rather than objectively looking at outlier situations that have been occurring. There are amazing and talented staff there which, despite all the continued volatility, can succeed.
Stock fire sales, executive deaths, massive store closings … things are quite clear for BBB. It is time to sell out and close down the business. This is a business whose time has passed and it is worth more than the sum of its parts. I vote to close down and capture what is available in the remaining assets which are left.