Bed Bath & Beyond Names Laura Crossen as Interim CFO

By guest author Nina Trentmann from the Wall Street Journal. Dean Seal and Suzanne Kapner contributed to this article.

Struggling home-goods retailer Bed Bath & Beyond Inc. on Tuesday named an interim executive to lead its finances, a move aimed at reassuring investors after the death of Chief Financial Officer Gustavo Arnal.

Captions courtesy by the Wall Street Journal

Union, New Jersey-based Bed Bath & Beyond said Laura Crossen would take over on an acting basis, effective Sept. 5, following the death by suicide of Mr. Arnal on Friday. Ms. Crossen, who joined the company in 2001, was promoted in late June to the role of chief accounting officer after her predecessor John Barresi resigned. She previously held the position of senior vice president of treasury and tax and will continue as principal accounting officer of the company.

Ms. Crossen didn’t immediately respond to a request for comment.

Mr. Arnal, who became Bed Bath & Beyond’s CFO in the spring of 2020, jumped from a New York building on Friday, two days after he had briefed investors on the retailer’s plans to secure new financing, cut jobs and close about a fifth of its stores.

His death adds to the company’s leadership gap following the ouster of former Chief Executive Mark Tritton in late June and the departure of other senior executives. Mr. Arnal had been a key figure in the management team hired by Mr. Tritton, who was replaced after the company posted disappointing results for two quarters in a row. Bed Bath & Beyond is currently led by Sue Gove, an independent director on the company’s board, while a search for a permanent CEO is under way.

Ms. Crossen will have to work to stabilize the company’s finances, which have been deteriorating sharply in recent months, analysts said. Bed Bath & Beyond has been burning through its capital reserves, ending May with $107.5 million in cash, down from $1.1 billion a year earlier. It booked a net loss of around UDF 358 million for the quarter ended May 28, compared with a net loss of about USD 51 million a year earlier.

Last week, Bed Bath & Beyond said it had secured USD 500 million in financing, including a new USD 375 million loan through JPMorgan Chase & Co. from Sixth Street Partners. The fresh cash would stabilize the business as the company enters the holiday season, Mr. Arnal and other executives said. Suppliers need assurance that it is safe to provide the company with inventory ahead of the holidays, analysts said. Bed Bath & Beyond last week said some vendors were asking for better payment terms amid concerns about its liquidity.

On a call with investors last week, Mr. Arnal had discussed Bed Bath & Beyond’s restructuring plans and provided interim financial forecasts. He also told analysts that the company was still in the process of finalizing its accounting for the quarter ended Aug. 27. Bed Bath & Beyond will have to file its quarterly 10-Q to regulators within 45 days or seek an extension.

Ms. Crossen will have to restore investor confidence in the company and its turnaround strategy, which took another hit after Bed Bath & Beyond said it would revamp its plans, close about 150 underperforming stores and bring back national brands after focusing on private-label products under former CEO Mr. Tritton.

“Bed Bath & Beyond needs to send a strong message to the street and communicate that they are focused on the turnaround,” said Cathy Logue, head of the financial officers practice at Stanton Chase, an executive search firm.

The stock had been declining after activist investor Ryan Cohen on Aug. 18 unloaded his entire stake in the company, about five months after he initially acquired it. On Aug. 16 and 17, Mr. Arnal sold about 55000 of his shares for roughly USD 1.4 million, when Bed Bath & Beyond shares jumped above USD 20, according to filings with securities regulators.

Mr. Cohen and Mr. Arnal have been named as defendants in a shareholder lawsuit seeking class action status, alleging they engaged in illegal insider trading. Bed Bath & Beyond said it believes the suit is without merit.

The stock is down about 50% since the beginning of the year and was trading at USD 7.29 on Tuesday, down about 14 % on the day.

Finding a permanent replacement for Mr. Arnal will likely be challenging for Bed Bath & Beyond as long as it doesn’t have a new chief executive officer, recruiters said. Concerns about the viability of the business add to the problem, as high profile candidates are unlikely to join a company that might be at risk of bankruptcy, according to analysts.