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Why Bed Bath & Beyond Stock Soared 28% in October

By Demitri Kalogeropoulos - Nov 4, 2019 at 9:30AM

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Investors cheered word that a new CEO would be taking over right before the holiday shopping season gets underway.

What happened

Bed Bath & Beyond ( BBBY -1.60% ) shares trounced the market last month: The stock gained 28% compared to a 2% increase in the S&P 500, according to S&P Global Market Intelligence. The rally put the stock -- which at one point in 2019 was down by more than 30% -- back into positive territory for the year.

A man holding shopping bags.

Image source: Getty Images.

So what

October was a busy month for the struggling retailing chain. The company on Oct. 2 revealed mostly bad operating news for its fiscal fourth quarter. Sales fell 7% as its customer traffic declined and its market share shrunk. However, investors saw faint reasons for optimism in the fact that gross profit margin inched higher. Bed Bath & Beyond also took a large inventory writedown charge that should give it more flexibility heading into the holiday shopping season.

The bigger news was the retailer's announcement that it found a new CEO in Mark Tritton, who takes over in early November.

Now what

Investors are optimistic that Tritton will take the types of bold steps that will be required to turn the business around, including aggressive store closures and cost restructuring. Yet the management team faces huge, persistent challenges across the business, and so investors might want to wait for more clarity before jumping into this volatile stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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