Shares of Bed Bath & Beyond Inc (BBBY.O), which has grappled with slumping business and shaken up management in recent months, fell nearly 20% on Tuesday in the first full day of trading after the sudden death of its chief financial officer.
The home goods company on Tuesday named accounting head Laura Crossen as interim chief financial officer following the death of finance chief Gustavo Arnal, according to a regulatory filing.
Arnal, 52, jumped from a New York skyscraper on Friday and his death was ruled a suicide. He had been named as a defendant last month in a lawsuit accusing the company of artificially inflating the stock price.
“Bed Bath & Beyond is in a challenging financial position, without a permanent CEO, and another gap in the senior leadership makes it harder to remain focused on execution,” Telsey Advisory Group analyst Cristina Fernandez said, attributing the stock’s drop to Arnal’s death.
Once known for providing shoppers with 20%-off coupons, Bed Bath & Beyond’s fortunes have declined after its moves to revamp shelves with more private-label products flopped and led to the firing of CEO Mark Tritton earlier this year.
Tritton was replaced by board member Sue Gove as interim CEO on June 29.
The chain is now focusing more on national brands, and last week said it would close 150 stores and cut jobs in an attempt to turn around its business.
On Tuesday, the company elevated Crossen to the interim CFO role a few months after she was named chief accounting officer.
Morningstar analyst Jamie Katz said “uncertainty surrounding a turn around” that has failed to take hold under different management teams remains an investor concern.
The company and Arnal were sued on Aug. 23 over accusations of artificially inflating the firm’s stock price in a “pump and dump” scheme, with the lawsuit alleging Arnal sold off his shares at a higher price after the scheme.
Arnal’s $1.4 million share sale was executed as part of a corporate “trading plan” – a legal agreement that allows insiders to trade in the company’s shares at a predetermined date – which the CFO had entered into in April, securities filings show.
GameStop Corp (GME.N) Chairman Ryan Cohen, who was Bed Bath & Beyond’s biggest investor until August when he sold his entire stake of 9.8%, was also named in the lawsuit.
A representative for Cohen’s firm, RC Ventures, declined to comment.
Pengcheng Si, the lead plaintiff in the August lawsuit, declined to comment on the litigation.
Bed Bath & Beyond said last week it was “in the early stages of evaluating the complaint, but based on current knowledge the company believes the claims are without merit.”
“This (lawsuit) is just the opening salvo,” Jacob Zamansky, securities arbitration lawyer at Zamansky LLC, said. He is not connected to the case.
“Whenever there is a large drop like this it is highly likely a big pension fund will come and file a similar lawsuit … and take over the case,” he added.
Shares of the retailer fell 18.4% on Tuesday to close at $7.04.
Nuveen LLC, the New York State Teachers’ Retirement System and the California State Teachers’ Retirement System are some of the top pension funds holding stakes in Bed Bath & Beyond.