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After GameStop chairman Ryan Cohen revealed that he owned 10% of Bed Bath, the merchandise retailer saw its shares climb.
Bed Bath & Beyond Inc (NASDAQ: BBBY) shares surged 65% in premarket trading on Monday, March 7th, following GameStop (NYSE: GME) chairman Ryan Cohen’s stake revelation. According to Cohen, he currently has a 10% stake in the prominent merchandise retailer through his investment company RC Ventures.
Now BBBY is 55% up.
Furthermore, Cohen also gave a scathing assessment of Bed Bath’s recent operations and performance. In a letter to the retailer’s board, the chairman opined that Bed Bath is struggling to remedy market share losses. In addition, Cohen pointed out that the retail chain, operating in the US, Canada, Mexico, and Puerto Rico, is facing supply chain issues. Offering a solution in the same letter, Cohen suggested that Bed bath should consider selling out to private equity while individualizing its Buy Buy Baby Chain. Cohen’s letter stated:
“We believe Bed Bath needs to narrow its focus to fortify operations and maintain the right inventory mix to meet demand, while simultaneously exploring strategic alternatives that include separating Buybuy Baby, and a full sale of the company.”
Cohen’s letter also took a shot at Bed Bath top executives for allegedly displaying insensitivity during the company’s underperformance. He accused the company’s CEO Mark Tritton for reaping excessive compensation from Bed Bath during its trying times.
In response, Bed Bath acknowledged that it had received Cohen’s letter, further explaining in a statement:
“We will carefully review their letter and hope to engage constructively around the ideas they have put forth. 2021 marked the first year of execution of our bold, multi-year transformation plan, which we believe will create significant long-term shareholder value.”
Furthermore, Bed Bath also pointed out that it had no prior contact with RC Ventures before Cohen’s letter.
GameStop Chairman’s Address to Bed Bath Represents Latest Case of Investor Disgruntlement with The Merchandise Retail Chain
Cohen’s letter is another occurrence of Bed Bath dealing with a disgruntled investor. In 2019, the retail chain settled a disagreement with a trio of activist investors, which had dragged on for months. Then, the bone of contention was – in part, with the addition of four new members to Bed Bath’s board. In addition, at the time, the three activists were criticizing Bed Bath’s e-commerce presence concerning contemporaries such as Amazon (NASDAQ: AMZN).
Following the settlement, Bed Bath onboarded former target executive Mark Tritton as its new president and chief executive officer. Tritton’s initial appointment saw the company’s stock soar 21% and sparked optimism among investors for improved fortunes. The upbeat expectations at the time were not misplaced, given Tritton’s wealth of merchandising experience and success at Target.
Since his resumption at the helm of Bed Bath, Tritton has undertaken a slew of corrective measures at the company. These include shuttering a large number of underperforming Bed Bath locations and selling non-core assets such as Cost Plus World Market and Christmas Tree Shops. Furthermore, the former Target executive also intensified stock buybacks, remodeled stores, introduced several private labels, and weathered the pandemic. Despite these, however, Cohen still maintains that Bed Bath is better off in the custody of a private equity owner.
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