Shares of Bed Bath & Beyond (NASDAQ:BBBY) are in the spotlight after the company announced that interim CEO Sue Gove would become the permanent CEO. The struggling retailer’s board voted unanimously to appoint Gove. Gove became interim CEO last June after replacing Mark Tritton and subsequently made headlines after purchasing 50,000 shares of BBBY stock at an average price of $4.61 per share. In addition, Bed Bath & Beyond authorized another $150 million at-the-market (ATM) offering after completing an ATM offering for 12 million shares earlier this week.
Gove will continue to commit to the strategic plan announced last August, which included closing 150 “lower-producing” stores and laying off 20% of the company’s staff. The CEO added:
“I am energized by the initiatives underway to provide our customers with an exceptional shopping experience, easily accessible products and compelling values across our Bed Bath & Beyond, buybuy BABY, and Harmon brands. We have a significant opportunity ahead and we intend to regain our dominance as a preferred shopping destination.”
Meanwhile, the company is still searching for a permanent CFO after the passing of Gustavo Arnal.
BBBY Stock: Bed Bath Announces $150 Million ATM Offering
The new offering adds on to financing that Bed Bath & Beyond has received in recent months. In late August, the company expanded its asset-backed revolving credit facility to $1.13 billion and received $500 million in new financing, of which $375 million was attributed to a first-in-last-out (FILO) loan from Sixth Street Partners. The financing will be used to “increase customer engagement, drive traffic and recapture market share.” Still, the new $150 million offering is making shareholders nervous, as it will dilute existing shares.
Restructuring expert and Macco CEO Drew McManigle cast doubt about the earlier 12 million share offering. He believes that the company will eventually file for Chapter 11 bankruptcy. Bed Bath & Beyond’s debt of $1.3 billion represents a major overhang for the company, which McManigle believes only Chapter 11 can fix.
Bed Bath & Beyond has also been having difficulty with inventory problems and aligning consumer preferences. In response, the company will hold its first supplier summit today in an attempt to alleviate these issues and communicate with suppliers. The company has also shuttered about a third of its proprietary brands while increasing investments in popular national brands.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.