Bed Bath & Beyond is being pressured to replace CEO Steven Temares and its entire Board of Directors by a coalition of three activist investors. Legion Partners Asset Management, Macellum Advisors and Ancora Advisors are planning to leverage their collective 5% stake to launch a proxy fight.
Complaints levied by the activist investors include:
- A “continued pattern of value destruction” due to an overly large selection of similar items, confusing pricing and an antiquated supply chain;
- “Repeatedly failed execution and strategy” including the lack of private label brands, furniture sales and experiential stores despite promises to develop these features; and
- “Excessive executive compensation and poor alignment of pay with performance” that has led to management pay increases despite “chronic underperformance.”
Bed Bath & Beyond is making efforts to overcome its troubles, which include a 1.8% same-store sales decline for the fiscal quarter that ended December 1, 2018. The retailer has identified 40 stores that will become “working labs” for the development of next-generation initiatives, Temares told investors during a results call on January 9, 2019. Potential changes include new product assortments, an emphasis on visual merchandising and an improved in-store experience.
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The working labs already are active in 18 stores, where the retailer is experimenting with seasonal and treasure hunt products as well as health, beauty and food items. The stores also have been reorganized to cut inventory, optimize floor space and create a cleaner environment.
While the activists aren’t pushing for a sale of the entire company, they want the retailer to consider selling underperforming brands like Buy Buy Baby and Cost Plus World Market, a person familiar with the matter told CNBC. Shares at the retailer jumped more than 25% following the investors’ announcement.
