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Tuesday, September 6, 2022
Today’s newsletter is from Brian Sozzieditor-in-chief and Anchor on Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and up LinkedIn.
I spent the Labor Day weekend thinking deeply about how I wanted to approach the suicide report of Bed Bath & Beyond CFO Gustavo Arnal. I haven’t really discovered a comfortable answer.
I’ve been critical of how Bed Bath & Beyond is doing and honest about what’s next for the home goods retailer. This comes with the territory of being a journalist, since we signed up to do: keep truth in power.
At the same time, a family man committed suicide and this must be handled with great care by a journalist. I’d argue that some outfits don’t do that, instead driving up Arnal’s August stock sales and the fact that it signed off on closing 150 stores last week. This approach is a shame.
So what I have for you basically boils down to two parts.
First, the human component.
Arnal, 52, fell to his death from the New York skyscraper known as the ‘Jenga’ tower on Friday afternoon. Reports say he jumped from the 18th floor. I and others just heard Arnal on a conference call Wednesday where Bed Bath & Beyond outlined its near-term turnaround strategy.
Arnal was hired early by former Bed Bath & Beyond CEO Mark Tritton in 2020, having risen through the ranks in finance capacities at P&G, Walgreens and Avon. Arnal’s LinkedIn page was deleted on Monday.
Suffice to say, getting the CFO position at Bed Bath & Beyond was the highest position in his career. If he was able to save Bed Bath & Beyond, it would likely put him on a CEO trajectory.
People who knew Arnall tell me he was a family man as well as a great teammate and leader. What he did on Friday was incredibly out of character, these people said.
“Our memory of Gustavo is that of a great professional and a happy family man, very devoted to his wonderful family,” a former colleague at P&G told me. He was a very intelligent and ‘hard working’ man, always ready to share his energy and smiles with the people around him, both in and out of the office.”
Another former colleague at P&G echoed this sentiment to me via email.
“He was a very nice guy, nice, straight ‘up the middle’ guy,” the person said. “I always had a smile.”
Someone who worked with Arnal at Bed Bath & Beyond told me they were “shocked” by the news and that it didn’t make sense.
Bed Bath & Beyond’s chief communications officer, Julie Strider, did not respond to my request for comment. The company released a statement saying they were “deeply saddened by this shocking loss.”
Having spoken to these people and others, what happened seems out of character for Arnal. I think Bed Bath & Beyond’s interim chief executive, Sue Gove, retaining Arnal as CFO after Tritton’s removal and allowing him to present to investors last Wednesday says a lot about how he was viewed internally by the executive team, the management board and its own financial team.
But as one former CEO told me while discussing this tragedy, C-suite jobs are high-pressure and lonely. And to that end, you just never know what a man has going on inside of him.
Indeed, Arnal’s recent work has been full of pressure cookers: He’s had to deal with a struggling cash-burning retailer, wild swings in the stock price in this setting that led to the meme trader, vulgar topics on social media and actions of influential shareholder Ryan. Cohen.
Arnal has dealt with stressful high-profile executive positions for decades, which add up and take a toll physically, mentally and emotionally – no matter how tough and smiling one appears to be on the outside.
We don’t know what goes on in a person’s mind and heart. It is especially difficult for us abroad to find executives in public companies, as they tend to play by the book. But as an investor, you have to remember that these are the imperfect people running the companies you’ve invested in. No one is a perfect executive. Mistakes will be made because companies are not run by robots (at least not yet).
Tragedy aside, I’d be remiss if I didn’t bring up part two.
When companies unravel (usually after a period of poor financial performance), strange things often happen in sequence. I’ve seen it over and over again. A quarter misses 30 cents, the stock price crashes, analysts hammer the company and say the future looks bleak for whatever reason. Speculation is rife about the need to pump cash with sanctions. Shareholder lawsuits come from investors who lost a ton of money. The stems are canned. Financial reports may be delayed. And so on.
All of this is starting to happen at Bed Bath & Beyond.
A pre-earnings investor call to outline a turnaround strategy, as seen last week, is not normal. Putting three people on a board because Cohen — who founded pet services company Chewy and is currently chairman of GameStop — is buying a bunch of stock and writing a shareholder letter is not normal. Same store sales up 26% in one quarter is not normal. Potentially selling 12 million shares to raise cash is not normal, especially for an established company like Bed Bath & Beyond. A shareholder lawsuit like the one filed Aug. 23 against Arnal, Cohen and JP Morgan, which alleged a “pump and dump” scheme is not normal. (A representative for Cohen did not return a request for comment on the lawsuit.)
These are all symptoms of a company unraveling, and I would expect more abnormal things to emerge in the coming days, weeks, and months. Investors have to be incredibly careful when putting money into distressed situations like Bed Bath & Beyond, because there’s usually a twist in the story that you couldn’t see coming. Sometimes these turns are tragic.
My thoughts are with Arnal’s family and friends.
What to watch today
9:45 am ET: S&P Global US Services PMIfinal August (44.2 expected, 44.1 last month)
9:45 am ET: S&P Global US Composite PMIfinal August (45.0 expected, 45.0 last month)
10:00 am ET: ISM Service IndexAugust (55.2 expected, 56.7 last month)
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