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Interim Bed Bath CEO puts skin in the game

Kimberly Chin
Bed, Bath & Beyond store in Pasadena, Calif.

Photo: Dania Maxwell / Los Angeles Times via Getty Images

Bed Bath & Beyond’s interim CEO is putting her money where her mouth is by snapping up some of the company’s stock. But it may not be enough to instill confidence in the company’s future.

Why it matters: Sue Gove has a colossal task ahead of her, as she needs to right-course a retailer that has suffered brutal earnings quarters and a 70% decline in its stock so far this year — all amid a teetering macroeconomic environment.

Driving the news: Gove bought $230,500 worth of BBBY stock, according to an SEC filing late Wednesday.

  • Shares spiked 25% to $5.61 in morning trading.

Between the lines: The company has several actions it needs to take, including bringing back a larger mix of brands to its stores, analysts say.

  • Bed Bath “moved too quickly rolling out proprietary brands alienating its core customers that will likely be difficult to win back,” Bank of America analyst Jason Haas said after its first-quarter earnings miss last week.
  • “Liquidity is now our top concern after the company burned over $500mn in 1Q,” Haas said.
  • The business is also burdened with excess inventory it needs to offload, a problem that has plagued other retailers that overcorrected to mitigate supply chain bottlenecks

Moreover, the fate of the buybuy Baby sale hangs in the balance, especially as several recent deals that were shopped (Kohl’s, Walgreens) got put on ice.

  • “The big question for the stock is the value of buybuy BABY as it appears the market is ascribing little to no (or even negative) value for Bed Bath,” Morgan Stanley analyst Simeon Gutman said.
  • Prior to her appointment, Gove was leading the strategic review committee for Bed Bath.

What they’re saying: “The committee is working closely with management and strategic and financial advisors to properly assess inherent value potential,” the company said last week.

  • It's focused on near-term actions and has identified a few strategies to drive growth for buybuy Baby, it added.

The bottom line: Gove has a steep hill to climb to win the trust and support of investors, including executive-turned-activist investor Ryan Cohen. (Bed Bath settled with the GameStop chairman in March, adding three new board members.)

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