Bed Bath & Beyond stock jumped 39% in premarket trading Monday after GameStop (ticker: GME) Chairman Ryan Cohen took a big stake in the home-goods retailer and urged it to explore strategic alternatives, including a full sale of the company.
Cohen, who co-founded online pet products retailer Chewy (ticker: CHWY) owns a 9.8% stake in Bed Bath & Beyond through his investment firm, RC Ventures LLC, according to a letter sent to its board Sunday. That makes him a top-five shareholder in the New Jersey-based chain, which is valued at around $1.6 billion.
Shares in Bed Bath & Beyond (BBBY) leapt 39% to $22.42 in premarket on Monday. The stock has dropped 47.76% in the last 12 months.
Under chief executive Mark Tritton, Bed Bath & Beyond has been staging a turnaround, introducing a number of private-label brands in the past few months, but it has come under pressure from rising inflation and ongoing supply-chain issues.
Cohen wrote in the letter that the company’s “scattershot strategy” is failing to end the stock’s “tailspin”, noting that core sales dropped 14% from a year ago in the most recent quarter.
“These results cannot be solely blamed on the pandemic when other retailers are nearing or exceeding 2019 sales levels. That is why we feel compelledto scrutinize the viability of the Company’s extremely ambitious and widely-touted strategy,” Cohen wrote.
He urged the company to narrow the focus of its turnaround plan and maintain the right inventory mix to meet demand, and consider separating its Buybuy Baby chain or selling the whole company, which he said could be better off owned by private equity.
Bed Bath & Beyond should also better align leadership compensation with results, Cohen wrote.
He added that he is focused on the long-term and won’t criticize management for laying the foundation for future value creation.
The letter was first reported by The Wall Street Journal.
Write to Lina Saigol at [email protected]
