The stock market has done well over the past couple of weeks, but volatile macroeconomic conditions once again led investors in the Nasdaq Composite (^IXIC -0.64%) to get a little worried. Increasingly, economists believe that the Federal Reserve will be extremely aggressive in raising interest rates in order to fight inflation, and the resulting turmoil in the bond market is spilling over into the valuations of some high-growth stocks. By 11:30 a.m. ET, the Nasdaq was down more than 1% after having been up earlier in the session.
Individual stocks were mixed, though, and Bed Bath & Beyond (BBBY) moved higher after making progress toward appeasing one of its most ardent critics. However, The Honest Company (HNST -0.33%) suffered a big decline after releasing its most recent financial results. Let's take a closer look at both of these stocks and why they were in the news Friday.
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Bed Bath & Beyond makes some concessions
Shares of Bed Bath & Beyond were up more than 3% late Friday morning. The beleaguered home goods retailer has been through a lot in recent years, but it now appears that the company might have found a solution to make one activist investor more comfortable with its future direction.
Bed Bath & Beyond faced substantial criticism from Ryan Cohen, who is the co-founder of e-commerce pet food giant Chewy and also leads fellow meme stock GameStop as chairman of its board. In February, Cohen took a nearly 10% stake in Bed Bath & Beyond and said that he believed the home goods retailer's management decisions had been extremely poor. At the time, he suggested pursuing either a full sale of the company or breaking off its successful buybuy Baby retail concept into a separately traded investment.
In order to head off more aggressive action, Bed Bath & Beyond agreed to allow three new members to join its board of directors immediately. Two of the new directors will join a committee of four whose job it will be to consider strategic alternatives for the buybuy Baby unit.
Investors have been frustrated with the challenges that Bed Bath & Beyond has faced in recent years, along with the stock's poor performance. Now, it'll be interesting to see if Cohen and his team can do any better with turnaround efforts than the company's current leaders have.
The Honest Company takes a hit
Elsewhere, shares of The Honest Company plunged 28%. The clean-lifestyle retailer reported fourth-quarter and full-year financial results that failed to live up to investor expectations.
The Honest Company's numbers were quite mixed. Revenue eased higher by 3%, as rising demand for its diapers, wipes, and skin and personal care products led sales in its core product categories up 19% year over year. However, a 68% drop in sales from its household and wellness segment limited the consumer products company's overall growth. Moreover, The Honest Company continued to lose money, and although quarterly losses narrowed to $0.10 per share, full-year 2021 losses ballooned to $38.7 million, or $0.43 per share.
Moreover, The Honest Company sees continuing headwinds. Its first-quarter revenue projections are fully 15% below what the company sold in the first quarter of 2021. Even though The Honest Company believes it will see modest growth during the final three quarters of 2022, it still won't be enough to bring full-year 2022 sales above 2021 levels. The consumer goods company also expects adjusted pre-tax operating earnings to remain negative for the year.
The market environment has changed, and investors no longer have as much patience with money-losing companies. The Honest Company needs to be more aggressive in its expansion efforts in order to satisfy its shareholders.
