Bed Bath & Beyond Inc. (NASDAQ:BBBY) shares are in a bull run after a notorious shareholder sent a letter to the group.
Ryan Cohen, manager of RC Ventrues LLC, which owns a 9.8% stake in the group, outlined a strategy for growth while lamenting the group’s misalignment of compensation priorities in a letter.
A similar intervention by Cohen in GameStop Corp (NYSE:GME) preceded an historic rise for the previously faltering stock, with Bed Bath’s share price up 114% at one point yesterday following the letter.
“While we like Bed Bath’s brand and capital allocation policy, we have concerns about leadership’s compensation relative to performance and its strategy for reigniting meaningful growth,” Cohen said.
“Approximately 18 months after releasing a 170-page cover-the-waterfront plan, the Company is struggling to reverse sustained market share losses, stem years-long share price declines and navigate supply chain volatility.”
Cohen presented a chart demonstrating Bed Bath’s shareholders returns over the last decade were –69.32%, compared to S&P 500 growth of 284.91% and growth in the company’s selected peer group of 217.76%.
This diverged with the company’s named executive officers receiving nearly US$36mln in compensation last fiscal year.
Cohen said the company was focusing on too many conflicting strategies, and that it wasn’t viable to engage in share buybacks, cutting expenses, investing in infrastructure and growth and launching new offerings.
He suggested the company stop releasing guidance at the behest of “Wall Street’s short-term information desires” and that it should seek to monetize its BABY banner through a sale or spin-off, with the company estimated to reach US$1.5bn in sales in fiscal year 2023.
“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, Inc. (“BABY”) and a full sale of the Company.”