Activists Attack Bed Bath & Beyond -- WSJ
March 26 2019 - 3:02AM
Dow Jones News
By Cara Lombardo
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 26, 2019).
A trio of activist investors thinks Bed Bath & Beyond Inc.'s
business model has gotten sleepy and plans to give the big-box
retailer a wake-up call.
Three activist funds -- Legion Partners Asset Management LLC,
Macellum Advisors GP LLC and Ancora Advisors LLC -- together
control a roughly 5% stake in Bed Bath & Beyond and are
preparing to launch a proxy fight to replace its entire 12-person
board, according to people familiar with the matter.
The group contends Bed Bath & Beyond has failed to adapt as
consumers increasingly shop online or expect unique experiences in
bricks-and-mortar stores, the people said. The retailer has allowed
its costs to increase, they said, resulting in shrinking margins
over the past several years.
The investor group wants the retailer, known for its large
stores packed with bedding, towels, kitchen trinkets and other home
goods, to better curate its merchandise and consider selling
noncore brands such as Buy Buy Baby and Cost Plus World Market to
focus on its core business, the people said.
It also wants it to replace Chief Executive Steven Temares, who
has led the company since 2003, they said, and better align
compensation with performance.
The group's 16 director candidates include former Gap Inc.
executive Jeffrey A. Kirwan, former Pier 1 Imports Inc. CEO
Alexander W. Smith and Macellum founder Jonathan Duskin, the people
said.
Union, N.J.-based Bed Bath & Beyond didn't immediately
respond to a request for comment.
Bed Bath & Beyond's shares are down 35% over the past year,
compared with the S&P 500's 8.1% rise, and its same-store sales
have dropped in each of the last seven quarters, according to
FactSet.
The company has recently said it is prioritizing profitability
over sales growth and that some of its actions, such as removing
less-profitable items and altering its free-shipping policy, could
hurt sales in the near term but should improve profitability over
time. The company has been updating its online shopping platform
and is testing in-store changes in several dozen Bed Bath &
Beyond stores, such as adding more seasonal items, cutting back on
inventory and updating displays.
Mr. Temares said on the company's most recent earnings call in
January that early results from some of those stores are promising,
and the company's shares rose more than 16% the following day after
it said it was ahead of schedule in reducing declines in operating
profit. The company is slated to report its fiscal fourth-quarter
earnings April 10.
Bed Bath & Beyond was founded by Leonard Feinstein and
Warren Eisenberg in 1971. The two men are longtime board members
and co-chairmen and control roughly 2.7% of the company's shares,
according to FactSet.
Legion, Macellum and Ancora all tend to agitate at small
companies. California-based Legion was seeded by the California
State Teachers' Retirement System and previously urged Perry Ellis
International Inc. to sell itself. New York-based Macellum focuses
on retail investments and previously settled with Children's Place
Inc., while Ohio-based Ancora has gained a board seat at
sandwich-chain Potbelly Corp.
(END) Dow Jones Newswires
March 26, 2019 02:47 ET (06:47 GMT)
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