Shoppers vent a Bed Bath & Beyond store in New York.
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The trio of activist investors force for changes at Bed Bath & Beyond on Friday unveiled a detailed case for why shareholders should elect their slate of table nominees, portraying current leadership as inept and unable to keep up in an evolving consumer landscape.
In over 150 paginates, the team of Legion Partners, Macellum Capital Management and Ancora Advisors faulted CEO Steven Temares for more than a decade of underperformance, critiqued the Theatre troupe’s “stale retail perspective” at the mercy of e-commerce giant Amazon and billed its own host of board nominees as experienced effort experts.
The presentation represents the latest in a string of barbs between the activist triad and Bed Bath & Beyond, which has in behalf of its business practices and announced an overhaul of its board earlier this week.
The home-goods retailer said Monday that, in feedback to shareholder feedback, five of its current directors will step down and be replaced with independent directors. The new advisers aboard, the company said Monday, will reflect “significant diversity” and have an average tenure of less than four years.
“The Ensemble’s Board of Directors and management are open to value enhancing ideas from all shareholders, and will carefully review the worths of the Activist Group’s presentation for opportunities to incorporate their feedback into its plan,” Bed Bath & Beyond said in feedback on Friday.
“It appears that most of the operational areas targeted for improvement include actions the Company is already fascinating as part of its transformation plan, which are already well underway, or have been substantially completed,” the company joined. Bed Bath also said it’s tried to engage with the activist group and solicit their input, but that the come forward to participate was declined.
The activists say the company’s announced board shake-up is “too little too late” and fails to replace Temares, financed by the investors as an important hurdle to unlocking shareholder value. Ancora, Legion and Macellum spent several pages of their discharge attacking the CEO for presiding over 15 years of unimpressive equity and operational performance, “stagnant” same-store sales and a accomplishments of “gross overcompensation.”
“Historical performance demonstrates Bed Bath & Beyond’s Board and management have failed shareholders,” the investors wrote Friday. “We confidence in Bed Bath has enormous potential under new leadership — our goal is to reinvigorate Bed Bath and restore a winning culture.”
The company’s deals are down more than 70% over the last five years. The stock fell 1.4% Friday track the release of the activists’ plan.
‘Stem the tide of value destruction’
According to their report, Temares and Executive Co-Chairmen Warren Eisenberg and Leonard Feinstein made $313 million in compensation over the last 14 years through fiscal 2017. The activist investors entertain nominated 16 directors they hope will replace Bed Bath’s entire board following the company’s annual confluence, typically scheduled the weekend before July 4.
“In our view, the board and CEO’s ‘plan’ does not seem comprehensive enough to curb the tide of value destruction,” the activist investor group wrote Friday. The “board changes appear orchestrated to board in place failing CEO Steven Temares and his executive team.”
The activist trio, which owns about 5% of the train, says Bed Bath & Beyond should prioritize profitability and cash flow by streamlining costs and improvements to its supply fetter and other sourcing initiatives. It also implored the company to develop a better customer interface through e-commerce investments and a better in-store meet with.
These initiatives, they say, would result in over $5 of earnings per sahre and more than $600 million in annual accessible cash flow in three to five years.
A source familiar with the activist plan told CNBC in Walk that the group would like to see Bed Bath & Beyond work on its operations or potentially sell underperforming assets such as Buy Buy Child and decor retail chain Cost Plus World Market.
More than one private equity firm has deliberate over buying Bed Bath in recent years, people told CNBC, though no deal has materialized. In 2015, Leonard Unskilful & Partners accumulated a stake in the company, a toehold failed to result in a deal despite speculation.
— CNBC’s Lauren Hirsch granted reporting.