Inside Bed Bath & Beyond, Concerns Over Mounting Stress for CFO


In the weeks before

Gustavo Arnal

took his own life, there was growing concern among

Bed Bath & Beyond Inc.


BBBY 3.73%

officials and directors over the demands being placed on the chief financial officer and the stress of the intensifying financial crisis at the home-goods chain, according to people familiar with the matter.

Sue Gove,

a board member who had taken over as interim chief executive officer in June, and some other board members thought Mr. Arnal was overwhelmed but didn’t want to replace the finance chief while the embattled retailer was in the midst of raising money, the people said.

Mr. Arnal told people that he was stressed, his friends said. He was putting in 18-hour days while he worked on the company’s restructuring plans. He was also inundated with emails from individual investors and plaintiffs’ lawyers questioning an August sale of some of his holdings in Bed Bath & Beyond, the people said.

After years of declining sales, Bed Bath & Beyond is facing an existential crisis. WSJ’s Suzanne Kapner explains why the company has fallen on hard times and looks forward to what’s next for the veteran retailer. Photo Illustration: Laura Kammermann/WSJ

Mr. Arnal was discussing with the company the possibility of taking a break, the people said. Company officials had calls about the topic before the Labor Day weekend and planned to pick up the discussions after the holiday, some of the people said.

On the morning of Aug. 31, Ms. Gove, Mr. Arnal and other executives announced that they had secured fresh financing and briefed investors on a major restructuring. Two days later, Mr. Arnal died from a fall at the 57-story New York City skyscraper where he lived with his wife, police said. The medical examiner determined it was a suicide.

Police said Mr. Arnal died from a fall at the New York City skyscraper where he lived.



Photo:

Douglas Sacha/Moment/Getty Images

His death and a shareholder’s lawsuit alleging wrongdoing at the company have become tabloid fodder. The company is investigating and reviewing Mr. Arnal’s emails; company officials have seen no evidence of fraud or wrongdoing, some of the people said.

The company has said that the suit is meritless and staff are mourning the loss of their colleague. Mr. Arnal’s family didn’t respond to requests for comment.

“I could see the stress on him,” said

Jan Zijderveld,

the former chief executive of Avon Products, who had dinner with Mr. Arnal and his wife six weeks ago at a rooftop restaurant in Manhattan.

Mr. Arnal was upbeat and animated throughout the meal, which stretched past 1 a.m., Mr. Zijderveld said. His friend said he was under pressure at work but didn’t discuss the details, said Mr. Zijderveld. “He’s the sort of guy who carries the world on his shoulders,” he said.

Bed Bath & Beyond has about 800 stores around the U.S. The chain boasted 27 straight years of growth until 2019, when it started to lose customers to online shopping. That year, its founders and leaders were ousted by activist investors.

The company has since been reeling from a failed turnaround strategy that left it with too much inventory, evaporating profits and a shrinking cash pile. The architect of the strategy, former CEO Mark Tritton, left in June, followed by other senior executives he had recruited to the company. Gone are the chief operating officer, chief merchant and chief accounting officer. Mr. Tritton declined to comment this week.

Mr. Arnal, who started at the company in May 2020, was one of the few members of Mr. Tritton’s leadership team to keep his role this year. He was a polished finance executive who had spent two decades at

Procter & Gamble Co.

and worked several years in London as chief financial officer for Avon and in a senior finance role at

Walgreens Boots Alliance Inc.

By the time Mr. Arnal arrived, Bed Bath & Beyond was in trouble. Its market value, which peaked above $17 billion in 2012, had shriveled to under $1 billion. The company’s business was upended by the Covid-19 pandemic: Stores were shut and supplies disrupted. Then it got caught up in the meme-stock mania, during which individual investors chased companies that Wall Street had left for dead.

Ryan Cohen, the billionaire co-founder of online retailer

Chewy Inc.

and an activist investor, unveiled a stake in Bed Bath & Beyond in March 2022 and called on the company to streamline its strategy and explore strategic alternatives. Bed Bath & Beyond quickly reached an agreement and added new board members. The shares took a hit in mid-August when Mr. Cohen revealed that he had unloaded his entire stake.

That coincided with a stock sale by Mr. Arnal. On Aug. 16, the CFO sold about $1.4 million of his Bed Bath & Beyond shares when the price briefly jumped above $20, according to a securities filing. The filing said the sales were made automatically under a prearranged plan that he had set up in April 2022. Such trading plans are commonly used by insiders to sell shares at predetermined prices or dates. Following the sale, Mr. Arnal still owned about 255,000 shares then worth about $5 million, according to the filing.

A failed turnaround strategy at Bed Bath & Beyond has left it with too much inventory, evaporating profits and a shrinking cash pile.



Photo:

Taidgh Barron/Zuma Press

The 52-year-old told colleagues he was stressed from the attention that his stock sale generated, saying that people and some media outlets misinterpreted it and didn’t acknowledge that it was preplanned, said the people familiar with the matter.

On Aug. 23, he was named as a defendant in a shareholder’s suit, along with the company, a bank and Mr. Cohen. The lawsuit, seeking class-action status, was filed by an attorney in Washington, D.C., named

Pengcheng Si

claiming about $100,000 in losses on his Bed Bath & Beyond investment.

The suit alleged that Mr. Arnal and Mr. Cohen conspired to inflate the company’s share price. No evidence is offered in the 24-page lawsuit about conversations the suit alleged between Mr. Arnal and Mr. Cohen or how Mr. Si allegedly learned about them.

Mr. Cohen has previously declined to comment, and Mr. Arnal hadn’t responded to the suit before his death. Mr. Si declined to comment on the litigation and said in an email Wednesday that he wished to extend condolences to Mr. Arnal’s family.

Records show that Messrs. Cohen and Arnal had no direct communications and interacted only on conference calls that included other executives, according to some of the people familiar with the matter.

Mr. Arnal had spent the summer trying to reassure vendors and investors about Bed Bath & Beyond’s finances heading into the critical holiday season after the company ended May with about $100 million in cash reserves. He faced an August-end deadline to find funds and negotiated with lenders right up to the day when he had to brief investors about the plan, the people said.

On a conference call last week, Mr. Arnal spoke carefully and calmly as he outlined plans to cut about 20% of corporate and supply-chain staff and close a fifth of the company’s namesake stores. He said that he had secured financing that would give the company about $500 million in additional liquidity and that he was still working to close the books on the quarter ended Aug. 27.

Seth Basham,

an analyst at Wedbush Securities, who spoke with Mr. Arnal after the call, said it was business as usual. “There was nothing out of the ordinary,” he said.

Mr. Arnal grew up in Venezuela. His family was relatively poor and, at around 18 years old, he started importing trucks and selling them to locals at a profit, according to Mr. Zijderveld. He used the proceeds to pay for college, he said. Mr. Arnal got an undergraduate degree in mechanical engineering and a masters in finance from universities in Venezuela, according to his LinkedIn profile, and then joined P&G.

At P&G, he was known as a demanding boss with high standards and integrity, said Brian Cullen, who worked with Mr. Arnal at the consumer-products giant and is now an executive at Lithko Contracting LLC. “You should always present the facts,” Mr. Cullen recalls Mr. Arnal teaching him. “Finance people don’t sell.”

Mr. Arnal worked at P&G for over 20 years, holding senior finance roles in the U.S. and Europe, before joining Walgreens Boots Alliance in 2017. He left Walgreens a year later. He had hoped to become finance chief of Walgreens’ Boots U.K. pharmacy chain, but the company hired a new finance chief shortly after Mr. Arnal joined, people familiar with the matter said.

At Avon, Mr. Arnal was intense, even by the standards of typically driven senior executives. “It was 24/7, ‘Let’s fix this thing,’” said Mr. Zijderveld, who recruited him to help with a turnaround of the beauty-products seller. “He was full of intensity. This is not a half-measure kind of guy.”

Mr. Arnal often put in long hours, then stayed out late with friends, and relished time with his wife and two adult daughters, both of whom now live in London, Mr. Zijderveld said.

The two executives worked together until Avon was acquired in early 2020. Mr. Zijderveld said he considers Mr. Arnal’s tenure to be a success. After the acquisition, Mr. Arnal wanted to be CFO of a big U.S. company, he said.

A few months later, Mr. Arnal landed the job at Bed Bath & Beyond.

Write to Cara Lombardo at cara.lombardo@wsj.com, Sharon Terlep at sharon.terlep@wsj.com and Suzanne Kapner at Suzanne.Kapner@wsj.com

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