Stocks: Bed Bath & Beyond Shares Rally on CEO Change -- WSJ
October 11 2019 - 3:02AM
Dow Jones News
By Karen Langley
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 11, 2019).
Shares of Bed Bath & Beyond Inc. surged Thursday,
registering their best day in six months, after the retailer named
a new chief executive -- and short sellers scrambled to cover their
positions.
The company said late Wednesday that the head of merchandising
at rival Target will become its new CEO, helping to push Bed Bath
& Beyond stock up 22% to $12.09. Shares made their largest
one-day percent increase since March 26, when they rose by a
slightly larger percentage.
Investors liked the new leadership for the housewares chain,
which has been struggling to adapt to the changing retail
environment and has been looking for a permanent leader since
earlier this year. The new chief executive, Mark Tritton, will join
in early November, ahead of the critical holiday shopping
season.
Bank of America Merrill Lynch analysts said in a research note
that Mr. Tritton was "an ideal choice," who has experience in
sourcing, merchandising and online retail, areas where they say Bed
Bath & Beyond needs improvement.
The company's shares are down 85% from their all-time closing
high of $80.48 in January 2014, and many investors expect the stock
to continue to fall.
About 53% of the company's publicly available shares are sold
short, according to FactSet.
Short sellers sell borrowed stock, hoping to buy the shares back
at a cheaper price to lock in a profit. A squeeze occurs when short
sellers respond to a share-price jump by buying back stock they
have sold in an effort to keep their losses from mounting.
Analysts note the 1,000-store chain faces fundamental
challenges.
Goldman Sachs analysts wrote that Bed Bath & Beyond likely
has too many stores and a supply chain that needs investment, among
other hurdles.
Analysts at UBS questioned whether a retailer that has
conditioned customers to shopping with coupons can maintain that
strategy in an age of price transparency.
With the company's shares up about 20% Thursday, "we see the
market putting the cart before the horse," Wells Fargo analysts
wrote, saying that while Mr. Tritton appears to be a strong hire,
it isn't guaranteed that Target's success can be repeated at Bed
Bath & Beyond.
(END) Dow Jones Newswires
October 11, 2019 02:47 ET (06:47 GMT)
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