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Simply when it appeared that issues couldn’t worsen for Mattress Tub & Past (OTCMKTS:BBBYQ), new issues are coming to mild. This struggling retailer has watched its share worth decline since even earlier than it filed for Chapter 11 chapter. Certainly, BBBYQ inventory has dropped virtually 95% over the previous six months. Nonetheless, now the corporate can also be going through challenges from Capitol Hill.
On July 5, Senators Elizabeth Warren (D-MA) and Corey Booker (D-NJ) penned a letter to CEO Sue Grove expressing their considerations over some allegations. Particularly, Mattress Tub & Past has allegedly did not pay severance to lots of the staff who misplaced their jobs when the corporate closed down retail places en masse.
Shares of BBBYQ inventory are rising barely immediately regardless of this information, however the letter actually doesn’t bode properly for Mattress Tub.
What’s Taking place With BBBYQ Inventory?
As InvestorPlace contributor Chris MacDonald reviews, BBBYQ inventory merely has no hope left. This firm struggled lengthy earlier than it declared chapter, however since doing so, Mattress Tub has solely encountered extra issues — even regardless of retail traders refusing to promote shares as its shops closed and costs plunged. Most not too long ago, Mattress Tub’s deal to dump its Purchase Purchase Child franchise to Go World Retail fell aside after the 2 corporations couldn’t agree on a valuation.
Now, although, if Warren and Booker are to be believed, Mattress Tub & Past hasn’t performed proper by its staff as properly. In keeping with the letter, whereas the corporate has not paid severance to 1000’s of out-of-work employees members, it has spent billions on inventory buybacks over the previous 20 years.
Per the letter:
“Regardless of the billions paid out to your shareholders, Mattress Tub & Past is making an attempt to keep away from paying severance to its staff. In its residence state of New Jersey, the corporate introduced layoffs of 1,295 staff on April ninth – the day earlier than a New Jersey state legislation giving laid off staff enhanced protections and assured severance went into impact […] Whereas your organization has, beneath monumental public strain, reversed course in New Jersey and agreed to acknowledge the newly expanded protections […] workers in different states have reported being denied severance pay and different advantages they promised.”
The letter goes on to lift some necessary questions on how Mattress Tub & Past plans to deal with these issues. For instance, Warren and Booker ask how a lot of the $240 million Mattress Tub not too long ago secured from Sixth Avenue Specialty Lending will go towards worker advantages. Additionally they press Gove to offer additional data on the corporate’s avoidance of severance pay “whereas shareholders and a few executives stroll away unscathed.” As of now, Mattress Tub has not but issued a response to the letter
What It Means
The truth that Mattress Tub & Past has been poorly run is much from breaking information. A fast take a look at how BBBYQ inventory has carried out because it started buying and selling over-the-counter (OTC) ought to inform traders all they should know. Nonetheless, highly effective lawmakers are additionally focusing on the corporate now.
Elevated scrutiny will solely push shares of BBBYQ down additional. Irrespective of how low it trades, Mattress Tub & Past repeatedly proves that it might probably all the time fall additional.
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On the date of publication, Samuel O’Brient didn’t maintain (both straight or not directly) any positions within the securities talked about on this article. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Tips.
