Many investors see it as a good sign when they put their cash into a company run by the CEO. After all, who knows what the business opportunities are? Unfortunately, this is not always the case. On Wednesday, Bed Bath & Beyond’s interim CEO Sue Gove bought $ 230,500 worth of shares by filing with the Securities and Exchange Commission, with Harriet Edelman and Jeff Kirwan each 50,000. It was revealed that he had raised nearly a dollar and added it to his holdings. Bed Bath & Beyond’s share price surged more than 20% in Thursday’s news trading. However, household goods retailers are not only struggling, they also have serious liquidity problems. In fact, buying a gob can be seen as a sign of weakness. Some say it’s an attempt to be more confident about the future of Bed Bath & Beyond in preparation for the important holiday shopping season. It may also be a gesture to soothe activist investor Ryan Cohen. The founder of the billionaire online pet retailer Chewy and the current chairman of GameStop was a shareholder of Bed Bath & Beyond through his investment company RC Ventures. Cohen has been upset for change in the company for months and has long been critical of the management team without skins in the game. Cohen has repeated this stance on Twitter since he expelled Bed Bath & Beyond’s former CEO Mark Tritton last week. Tritton was evacuated after the company reported that first-quarter performance was sluggish and same-store sales reached 27%. Cohen declined to comment through a spokesperson. When asked about insider purchases, Loop Capital analyst Anthony Chukmba said, “At best, this is window dressing.” “That is, it never shapes or shapes the basic story, and the basic story is terrible.” Chukumba currently has a share sale rating, and Chapter 11 Bankruptcy Filing is imminent. I am more and more concerned about the imminence. Cash Crunch’s Bed Bath & Beyond Stock Meme Stock Beloved was caught up in the Meme Stock frenzy. The stock saw a short-interest pop that fueled a huge rally. However, interest has diminished and inventories have fallen by more than 65% since the beginning of the year. It closed at $ 5.09 on Friday. There are many Gove challenges in Bed Bath & Beyond, but cash is an urgent issue. The retailer ran out of more than $ 500 million in the first quarter of the fiscal year ending May 28, leaving about $ 100 million in cash and $ 700 million in revolving credit lines. Bank of America analyst Jason Haas said in a research note that he modeled Bed Bath & Beyond and ran out of $ 200 million in cash in the second quarter and $ 100 million in the third quarter. I am saying. Second, his model predicts a $ 200 million inflow to the company to sell through inventory during the holidays. This scenario can only be run if Bed Bath & Beyond has shelves with the types of products that shoppers want to buy. One of the obstacles admins may face is when a terrifying vendor changes their credit terms. This has happened to other retailers, especially Sears, in the past. And it will already exacerbate the bad situation. Vendors are usually unsecured creditors in bankruptcy court proceedings, and vendors can incur significant losses if retailers seek the protection of Chapter 11. To limit the risk, vendors may reduce shipments to problematic retailers or stop supplying goods altogether. Another option is to request more payments in advance or a shorter payment period. The impact can be dramatic. Haas of Bank of America has calculated that Bed Bath & Beyond’s cash flow will be $ 400 million if the supplier shortens the payment period from 60 days to 30 days. Haas said it is a difficult position to support with current liquidity. Liquidity Discovery Gove may be hoping to provide Bed Bath & Beyond with an economic cushion by raising funds through the issuance of new shares and debt. Loop’s Chukmba suspects Bed Bath & Beyond could raise more money. Bed Bath & Beyond’s comments were not immediately available. However, in the latest earnings announcement, Chief Financial Officer Gustavo Arnal said the company has sufficient liquidity. “As we are talking, we have enough liquidity within the line of credit, [Berkeley Research Group]There are ways we are looking to work with financial advisors to further increase liquidity and navigate the working capital cycle, especially in the next two quarters, given the seasonality of the business. .. Bed Bath & Beyond is confident in its ability to manage cash, liquidity, strengthen its balance sheet and place a great deal of focus on investees and cost savings. Along with the earnings report, Bed Bath & Beyond announced that it has hired consultancy Berkeley. The research group helps manage cash, inventories, and balance sheets. Berkeley has worked with many troubled retailers, including Modell’s, Things Remembered, and Gymboree. These three retailers eventually sought bankruptcy protection. She has over 30 years of industry experience as an executive at golf equipment retailer Golfsmith and jeweler Zale, and as a retail restructuring advisor. She Goveal She has been a board member of Bed Bath & Beyond since 2019 and a member of the Strategy Committee. Her company’s struggle and volatile financial situation are well known to her. Bed Bath & Beyond Tritton’s efforts at Bed Bath & Beyond were already frustrated three years ago when former Target executive Tritton joined. He was the first CEO to lead a retailer who wasn’t growing in that rank. He quickly moved to bring his team and tried to carry out some of the strategies that were very successful for him as the main merchant of the target. Most notably, he launched many private brands. At the same time, he reduced the coupon, which turned out to be unpopular with Bed Bath & Beyond’s most loyal customers. The combination of these two moves could have been his redo. The new store brand didn’t have time to gain traction and attract new shoppers. At the same time, the store base fled when the discounts they enjoyed were removed. Other efforts by Tritton should have improved its financial position. He sold half of the company’s real estate, earned more than $ 250 million, and abandoned non-core businesses such as Cost Plus World Market and Christmas tree shops. However, some of that money was spent as part of his turnaround plan to refurbish the store to keep it clean. The company has also accelerated the pace of its $ 1 billion share buyback program. That decision is currently being questioned. “It didn’t make sense to aggressively buy back shares in the midst of a turnaround, especially when things went wrong,” said Chukunba. “That didn’t make any sense. They should have maintained liquidity.” Currently, Tritton and many other executives are out. Chief Accounting Officer John Valesi, Chief Merchant Joe Harzig, and Financial Planning and Analysis SVP Heather Plutino have all left. Bye bye baby’s fate? According to analysts, Cohen has been pushing for the sale or spin-off of Bye, Bye Baby, but the separation of the business could put Bed Bath & Beyond in a worse financial position. Bye, Bye Baby is a star in the company’s portfolio. We continue to grow sales and have a strong position in this category. Bed Bath & Beyond’s independent chair, Edelman, said at a recent earnings briefing that he is working to determine the future of Bye, Bye Baby. “This business is a very attractive business and we are not the only ones who value it,” Gove added by phone. “We know we’re interested.” Chukumba recently looked at other bankrupt companies he had previously covered to see if there were any similarities in the Bed Bath & Beyond situation. The most amazing thing he found was that all the companies he investigated (Circuit City, HHgregg, Pier 1 Imports) had better sales in the two quarters before filing for bankruptcy protection than Bed Bath & Beyond. .. He also said that all three retailers had low balance sheet leverage. Bed Bath & Beyond’s net debt was $ 1.27 billion, while HHgregg’s net debt at the time of filing was only $ 28 million. Peer One was $ 346 million and Circuit City was $ 189 million. Retail trends also do not favor the company. The economy is slowing and retailers, including Wal-Mart and Target, have noticed excess inventories. “they [Bed Bath & Beyond] “I was having a hard time when everyone else was doing well,” he said.
Why Bed Bath & Beyond’s CEO stock purchase is a sign of stress, not strength
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