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- Former Bed Bath & Beyond CEO Mark Tritton is suing the company, alleging non-payment of his severance agreement.
- The lawsuit, filed Friday in New York, also sets up a full-throated defense of his failed turnaround strategy.
- Bed Bath & Beyond said Thursday it needs to raise up to $300 million in new funding to avoid bankruptcy.
The number of former Bed Bath & Beyond employees not receiving severance payments is now larger by one.
A lawsuit filed Friday in New York on behalf of former CEO Mark Tritton, who was replaced last June by Sue Gove, says the company stopped making payments on the $6.7 million severance package in January.
In addition to seeking damages, the suit is also a full-throated defense of Tritton's tenure and legacy at the helm of the struggling housewares giant.
A representative for Bed Bath & Beyond told Insider the company does not comment on legal matters.
Almost a full page of the 12 pages of text is devoted to highlighting the advantages of private label merchandising — otherwise known as store-brand — and Tritton's expertise on the subject from his time at Target, where he launched more than 30 brands.
One of Bed Bath & Beyond's biggest problems in 2019, the suit says, was its failure to have a serious private-label strategy and Tritton was specifically hired to give it one.
The failure of that strategy was not his fault though, the suit says.
When the pandemic hit in 2020 and more people worked from home and stimulus checks flowed freely, the suit says the company saw its first sales growth since 2016.
The suit adds that the company was expecting private-label sales to represent nearly a third of its business "in the near term."
Store managers in multiple states told Insider the company was at that time ending many of its longstanding purchasing agreements with national brands in favor of its in-house offerings.
But then the Delta variant emerged, snarling up supply chains and keeping customers out of stores.
"Since BBBY became more reliant on fewer manufacturers to produce BBBY's private label brands, BBBY had limited solutions to ensure inventory was available for consumers. Indeed, during the 2021 Christmas season, BBBY ran short of its 200 bestselling items," the suit said, calling the challenges "beyond anyone's control."
Tritton, the suit says, was simply doing the job he was hired to do and is still entitled to his bonus of two-years' salary, plus bonus, paid out in installments over 24 months, regardless of claims that the company is "strapped for cash."
Bed, Bath, and Beyond
But Bed Bath & Beyond's filings with the US Securities Exchange Commission on Thursday — a day before Tritton's suit was filed — say that the company could go out of business in the next 12 months and needs to raise up to $300 million in a new stock offering.
And the timeline is looking much, much shorter than that.
Because Bed Bath & Beyond must file its annual report to the SEC by April 26, it needs to have $700 million worth of shares available for trading in the previous 60 days in order to continue qualifying as a "well-known and seasoned issuer," Farrell Fritz attorney Alon Karen told Fortune.
That's a tall order for a company with a current market capitalization of $45 million, shares trading at 38 cents, and fourth-quarter sales down nearly 50% compared with last year, according to preliminary figures.
Given the dire financial straits the company is in, Tritton may not see another dime from Bed Bath & Beyond, but that might not be the ultimate reason he filed the suit.
If you are a current or former employee of Bed Bath & Beyond or Harmon who would like to share your story, please get in touch with Dominick via email. Responses will be kept confidential, and Insider strongly recommends using personal email addresses and non-work devices when reaching out.
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