Bed Bath & Beyond CEO Mark Tritton
Source: Bed Bath & Beyond
Bed Bath & Beyond CEO Mark Tritton said the rise in the retailer’s share price will not prevent the company from fulfilling its recovery plans, including a fast-track share buyback plan.
“We are not doing this day after day, but for a long time,” Tritton said in an interview with CNBC’s Squawk on the Street. “We have a process for evaluating and evaluating truly reasonable costs to maximize shareholder value. Shares rise to $ 27.32? This is a point in time and not part of an overall investment plan at these levels. ”
On Tuesday, the company made a flurry of announcements, including the launch of a new digital marketplace, a partnership with Kroger, and a change of leadership. Bed Bath & Beyond also said it plans to complete $ 1 billion share buyback plan by the end of fiscal 2021, two years ahead of schedule.
As a result, shares soared more than 80% during extended trading and through Wednesday morning. Bed Bath & Beyond closed up about 15% at $ 19.30 a share.
The sudden surge was likely triggered by a so-called short squeeze, where hedge funds that were betting against stocks were forced to scramble and buy back their shares to cut their losses.
Bed Bath & Beyond was one of the shortest stocks in the country, with 27% of its shares sold short. According to FactSet, it is the third largest US stock in 1,500.
According to the sentiment tracker, there was also a huge jump in mentions after the call to Reddit. Swaggy stocks… Bed Bath & Beyond was a favorite with the public earlier this year, joining companies like GameStop and AMC Entertainment before losing popularity as the retail movement eased somewhat.
When asked if the company’s plans to repurchase would be affected by fluctuations in the shares, Tritton said the company would proceed with caution.
“Unfortunately, we’ve seen this a few times before … when we see these bursts and then regroup,” Tritton said. “We are not going to waste our precious dollars as well as our shareholders’ dollars.”
But, added the CEO, “when things settle down, we will have the right stock price to be able to buy before we see our three-year trajectory.”
A number of Wall Street banks have also issued notes to their clients warning that Bed Bath & Beyond shares could fall, with some warning, as much as 50% after Wednesday’s sharp rise.
—CNBC John Melloy contributed to this report.