What happened

Bed Bath & Beyond (BBBY) investors trailed a declining market this week. The specialty retailer's stock dropped 12% through Thursday trading, according to data provided by S&P Global Market Intelligence. The S&P 500 dropped 4.6% in that time. The chain's volatile stock has been under extreme pressure in 2022, down over 70% since the start of the year.

This week's slump came amid turbulence in the wider market and news of an executive departure.

So what

The roughly 5% plunge in the wider market was a clear pressure on Bed Bath & Beyond's stock this week. Investors became more concerned that a recession might develop over the short term, which would likely complicate the retailer's transformation plans. Bed Bath & Beyond has endured steep sales declines and market share drops lately, along with ballooning net losses. A further slowdown in its home furnishings industry would amplify those challenges.

The company also lost a key executive this week as Rafeh Masood, chief customer and technology officer, announced his resignation. Management didn't specify the reason for Masood's departure, except to say that it was "not the result of any disagreement with the company on any matter relating to the company's operations, policies, practices, or financial statements." Turnover at such a high level can often spook investors.

Now what

Bed Bath & Beyond is entering an especially risky period for the business. The holiday shopping season is traditionally its most profitable, but weak customer traffic trends in recent months, along with rising levels of price cutting in the retailing industry, imply a tough quarter ahead. The retailer is slashing costs, yet it still burned through roughly $200 million in the last quarter.

Worries about future cash outflows dominated investors' attention this week and should stay on Wall Street's mind for the foreseeable future. Bed Bath & Beyond's volatile stock could always spike higher in the short term. Yet strong long-term returns aren't likely until the business shows concrete signs that sales and earnings trends are stabilizing.