Activist investor Jonathan Duskin of Macellum Capital Management battled a failed management team at Bed Bath & Beyond and won big in 2019.
Duskin, whose successful campaign led to a board overhaul and ultimately the appointment of current Bed Bath & Beyond CEO Mark Tritton, told Yahoo Finance Live what GameStop chairman Ryan Cohen is doing with the home goods retailer.
“Ryan has a lot of fans and is very respected,” says Duskin. “I think we’ve been saying for a long time that there’s a lot of value in Buy Buy Baby. Remember that Baby was in trouble when Mark and the board got involved. They did a good job of making a difference. And now they have plans. to greatly increase coverage. So Baby is a huge asset. They definitely need to do something else to monetize it.”
Cohen enters.
Billionaire Chewy, who has become the savior of once-proud retail organizations, announced a 9.8% stake in Bed Bath & Beyond on Monday.
Cohen says the execution of Bed Bath & Beyond under Tritton borders on horror, compensation is unrealistic and the business should be split up (Buy Buy Baby business sold off) and then completely sold to financial backers (also known as private equity).
“We carefully assessed Bed Bath’s assets, balance sheet, corporate governance, executive compensation, existing strategy and potential alternatives. While we like the Bed Bath brand and capital allocation policy, we have concerns about management rewards versus performance and its strategy to resurrect the big ones. Approximately 18 months after the release of the 170-page front-page cover, the company is trying to reverse a steady loss in market share, halt multi-year share price declines and deal with supply chain volatility. Meanwhile, the company’s appointed executives were collectively awarded nearly $36 million in compensation last fiscal year — a seemingly exorbitant amount for a retailer with a market capitalization of nearly $1.6 billion,” Cohen said in a letter obtained by Yahoo Finance. .
The story goes on
Cohen believes Bed Bath & Beyond can add billions in shareholder value by narrowing its focus and selling itself piecemeal.
Shares of Bed Bath & Beyond rose 34% to $21.72 for the session.
A spokesman for Cohen declined to give Yahoo Finance an interview with him. Bed Bath & Beyond declined to comment on the report Sunday night.
“Bed Bath & Beyond’s board and management are in constant dialogue with our shareholders and while we have not had any prior contact with RC Ventures, we will carefully review their letter and look forward to constructive engagement on their ideas. Our Board of Directors is committed to acting in the best interests of our shareholders and regularly reviews all pathways to create shareholder value 2021 was the first year of our ambitious multi-year transformation plan, which we believe will generate significant long-term shareholder value, Bed Bath & Beyond said in a statement. before opening Monday.
While Cohen (and his new CEO) has yet to publicly articulate a plan for investors at GameStop to rescue this struggling retailer (besides launching an NFT marketplace), he does make important points about Bed Bath & Beyond.
Bed Bath & Beyond’s once-promising turnaround hit a brick wall as the company grappled with pandemic-fuelled supply chain issues and challenges to follow through on a massive plan to change the in-store shopping experience. The decision to drop coupons for several months was not well received by consumers.
Window display and sign for a Bed Bath & Beyond store in downtown Seattle, Washington. Items are stacked in windows in this city location.
And it all showed up in Bed Bath’s financial statements and Wall Street reports. Sales for the three-month period just ended were down 28% from last year. Adjusted operating profit fell $80 million from last year. When the company reported its results in early January, it listed current-quarter adjusted earnings of $0 to $0.15. The street at the time was looking for $0.70.
Shares are down 63% from a 52-week high on June 2 (prior to Monday’s reaction to Cohen’s involvement).
Duskin added (who is now campaigning against Kohl’s bumbling leadership): “I’m sure the board will listen to Ryan. I think he [Tritton] does a good job. He came across a few speed bumps, but I believe they are already on track for what they planned last year.”
Duskin is ready to work with Cohen on the Bed Bath & Beyond project.
“I don’t know Ryan. He seems like a smart guy. He seems to be very successful. Always happy to listen and find out if there is an opportunity to work with someone, ”Duskin added.
Brian Sozzi is the editor-in-chief and Lead at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and beyond LinkedIn.
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