Push for big changes at Bed Bath & Beyond
Bed Bath & Beyond is being targeted by activist investors gearing up for a proxy fight.
A group of three activist hedge funds are looking to replace the chain’s entire 12-person board, along with longtime CEO Steven Temares, who has led the company since 2003. The group — comprised of Legion Partners Asset Management, Macellum Advisors and Ancora Advisors — together hold about a 5% stake in Bed Bath & Beyond.
The investors believe that the retailer has not kept up with the new retail environment and that it has allowed its costs to increase. They want the company to revamp its inventory and consider selling such noncore assets as Buy Buy Baby and Cost Plus World Market, reported CNBC. They also want to link executive compensation more closely with performance.
“The time is now to instill best-in-class corporate governance and hold management and directors accountable for the horrendous performance that has resulted in $8 billion of value destruction over the over the last 15 years at Bed Bath & Beyond,” Chris Kiper, co-founder and managing principal of Legion Partners, said in a statement.
Bed Bath & Beyond issued a statement in which it said members of its board and senior management team held several discussions with Legion and Macellum over the past few weeks, asking them several times for their ideas to improve the company’s business, but they (Legion and Macellum) did not provide any. (Ancora has not previously reached out to or engaged with the retailer.)
“We also invited them to participate in the board refreshment program we have been undertaking in recent years and are in the process of accelerating with investor input,” Bed Bath & Beyond said. “Instead they chose to publicly attack the company and provide their intent to nominate directors to take over the full board. Unfortunately, while our directors and management were seeking to engage in good faith, it appears that the Legion and Macellum representatives were merely seeking information to support their attack.”
The retailer also noted that it is already addressing many of the areas highlighted by the activist group.
"The company is making significant progress on its transformation to continue to strengthen its position as the expert for the home and heartfelt life events," Bed Bath & Beyond said. "It takes time to transform a company and the initiatives we have underway are delivering results."
Bed Bath & Beyond has been updating its online shopping platform and is testing in-store changes in select locations. Most recently, the company announced the launch of its first-ever private-label brand, Bee & Willow Home. It is the first of six in-house decorative home brands that Bed Bath & Beyond will introduce this year and in 2020.