The sudden demise of Mattress, Tub & Past’s former chief monetary officer amid allegations of fraud towards him raises additional questions in regards to the struggling chain.
Gustavo Arnal died Friday after leaping from a luxurious skyscraper in downtown Manhattan. New York’s medical expert dominated his demise a suicide, in line with the New York Instances and different media retailers.
The demise of the 52-year-old government comes because the once-popular retailer, whose gross sales and inventory worth have plunged since final 12 months, struggles to show itself round. Arnal can be named as a defendant in a securities lawsuit that accuses him, his employer and billionaire entrepreneur Ryan Cohen of a pump-and-dump scheme to inflate Mattress, Tub & Past inventory.
Mattress, Tub & Past didn’t reply to a request for remark. On its web site, the corporate referred to as Arnal’s demise a “surprising loss.”
“Gustavo can be remembered by all he labored with for his management, expertise and stewardship of our Firm. I’m proud to have been his colleague, and he can be actually missed by all of us at Mattress Tub & Past and everybody who had the pleasure of understanding him,” Harriet Edelman, the corporate’s chair, mentioned in a press release.
GameSpot, the place Cohen is chairman, additionally didn’t reply to a request for remark.
A inventory shock — then a lawsuit
Mattress, Tub & Past shares have been on a curler coaster, hovering through the “memes inventory” frenzy of 2020 earlier than fading final 12 months. The inventory surged once more in March when Cohen, the founding father of on-line pet merchandise firm Chewy.com, revealed a virtually 10% stake within the firm.
Cohen is credited with engineering a turnaround at GameStop, and his possession was seen by some retail buyers as a optimistic sign for Mattress, Tub & Past. To kick-start the house items firm’s restoration, he rapidly helped usher Mattress, Tub & Past’s CEO and chief advertising and marketing officer out the door and appointed two new administrators.
Cohen filed extra paperwork with the Securities and Alternate Fee on August 16, re-stating his possession of Mattress, Tub & Past. That led the inventory to surge as soon as once more. However that very same day, Cohen instantly began promoting his stake, prompting a sell-off that drove the corporate’s inventory to one-third it is unique worth inside every week.
That prompted some to name for an investigation by the SEC, and on August 23 a shareholder go well with was filed in Washington, DC, district courtroom, alleging securities fraud.
The go well with, which is searching for class-action standing, claims
that Cohen, Arnal, JPMorgan and others “engaged in a fraudulent scheme to artificially inflate the worth of BBBY publicly traded inventory” and “blatantly misrepresented the worth and profitability of BBBY” to entity retail buyers to purchase shares.
In accordance with the lawsuit, Cohen and Arnal cooked up a scheme whereby Cohen would hype the corporate’s inventory publicly whereas Arnal would restrict inventory gross sales by insiders, driving up its worth. The grievance additionally claims that Cohen lied when he re-stated his possession of the corporate and alleged that he had began promoting his inventory at that time.
Arnal additionally bought 55,000 shares of Mattress, Tub & Past on August 16, though his disclosure states that the plan to promote began in April.
Cohen and Arnal “engaged in unlawful insider buying and selling and fraudulent SEC reporting,” the go well with claims. It additionally alleges that the 2 “took benefit of the inflated inventory worth and used fraudulent and deceptive SEC filings to promote all their BBBY shares and choices at artificially inflated costs to unsuspecting and harmless public buyers after which retained management of the revenue.”
Mattress, Tub & Past instructed buyers in an August 31 securities submitting that “The corporate is within the early levels of evaluating the grievance, however based mostly on present information the corporate believes the claims are with out benefit.”
Even earlier than the shareholder go well with, Wall Road’s view of Mattress, Tub & Past had turned bitter. Analysts at Wedbush downgraded the inventory after Cohen’s transfer to liquidate his stake, calling the worth “disconnected” from the corporate’s fundamentals.
“Mattress, Tub & Past “finds itself in an unenviable place because it faces steep market share losses, an overabundance of stock and dwindling money reserves,” they wrote. “Even when [Bed, Bath & Beyond] manages to make progress towards a few of its operational objectives within the coming quarters, we see the present threat/reward as disproportionately skewed to the draw back.”
The retailer final week secured $500 million of latest financing and outlined one other turnaround plan that features closing 150 shops, slashing one-fifth of workers and chopping down on retailer manufacturers. It’s nonetheless trying to find a brand new CEO and chief advertising and marketing officer.
Mattress, Tub & Past’s worth has fallen 68% during the last 12 months, closing Friday at $8.63.