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Why Bed Bath & Beyond and The Honest Company moved the Nasdaq on Friday

The stock market has performed well over the past two weeks, but volatile macro conditions have once again pushed investors from Nasdaq Compound ( ^IXIC -0.16% ) to worry a little. Increasingly, economists believe the Federal Reserve will be extremely aggressive in raising interest rates to fight inflation, and the resulting turmoil in the bond market is impacting the valuations of some high-risk stocks. growth. As of 11:30 a.m. ET, the Nasdaq was down more than 1% after rising earlier in the session.

Individual stocks were mixed, however, and Bed bath and beyond (BBBY 2.22% ) moved higher after making progress in placating one of his most ardent critics. However, the honest company (HNST -22.52% ) suffered a sharp decline after the publication of its latest financial results. Let’s take a closer look at these two stocks and why they made headlines on Friday.

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Bed Bath & Beyond makes some concessions

Shares of Bed Bath & Beyond rose more than 3% on Friday morning. The beleaguered home goods retailer has been through a lot in recent years, but now it looks like the company could have found a solution to make an activist investor more comfortable with its future direction.

Bed Bath & Beyond has come in for substantial criticism from Ryan Cohen, who is the co-founder of the e-commerce pet food giant Soft and also runs other meme stocks GameStop as chairman of its board of directors. In February, Cohen took a nearly 10% stake in Bed Bath & Beyond and said he thought the housewares retailer’s management decisions had been extremely poor. At the time, he suggested pursuing either the complete sale of the business or breaking up his BuyBuy Baby retail concept into a separately negotiated investment.

In order to avoid more aggressive action, Bed Bath & Beyond agreed to allow three new members to join its board immediately. Two of the new directors will join a four-person committee whose mission will be to think about strategic alternatives for the buybuy Baby unit.

Investors have been frustrated by the challenges Bed Bath & Beyond has faced in recent years, as well as the poor performance of the stock. Now, it will be interesting to see if Cohen and his team can do better with the turnaround efforts than the company’s current executives.

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 fell short of investors’ expectations.

The numbers for The Honest Company were quite mixed. Revenue rose 3% as growing demand for its diapers, wipes, and skin and personal care products drove sales up 19% in its core product categories year-over-year. However, a 68% drop in sales of its household and wellness segment limited the consumer products company’s overall growth. Additionally, The Honest Company continued to lose money, and although quarterly losses narrowed to $0.10 per share, full-year 2021 losses climbed to $38.7 million, or $0.43 per share.

Additionally, The Honest Company sees persistent headwinds. Its first-quarter revenue projections are entirely 15% lower than what the company sold in the first quarter of 2021. While The Honest Company believes it will see modest growth in the last three quarters of 2022, that won’t be enough. still failed to bring full-year 2022 sales above 2021 levels. The consumer goods company also expects adjusted pretax operating income to remain negative for the year.

The market environment has changed and investors no longer have as much patience with companies that lose money. The Honest Company needs to be more aggressive in its expansion efforts to satisfy its shareholders.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.