Shoppers exit a Bed Bath & Beyond store in New York.

Michael Nagle | Bloomberg | Getty Images

Company: Bed Bath & Beyond (BBBY)

Company: Bed Bath & Beyond runs a retail chain. It operates through two segments, North American Retail and Institutional Sales. The company sells a range of household items, including bedding and related items, bath items and kitchen textiles; and home furnishings, such as kitchen and tabletop items, fine tabletop, basic household items, general home furnishings, consumables, and various youth products. As of February 27, 2021, the company had 1,020 stores, including 834 Bed Bath & Beyond stores in 50 states, the District of Columbia, Puerto Rico and Canada; 132 buybuy Baby stores; and 54 stores under the names Harmon, Harmon Face Values, or Face Values. It also offers products through various websites and applications, such as,,,,, and In addition, it operates Decorist, an online interior design platform that provides personalized home design services.

Market value: $2.1 billion ($22.07 per share)

Activist: RC Ventures

Ownership percentage: 9.81%

Average Cost: $15.34

Activist Commentary: RC Ventures is the investment vehicle for Ryan Cohen. Cohen is an extremely successful entrepreneur turned activist investor. Cohen is the co-founder and former CEO of e-commerce company Chewy, which he built and sold to PetSmart in 2017 for $3.35 billion. Cohen remained CEO after the acquisition until March 2018, and in June 2019 Chewy went public with a valuation of $8.7 billion. His first 13D filing was on GameStop, which famously rose to nearly $500 a share, primarily on the back of Reddit forums and squeezes, making Cohen a paper profit of over $4 billion on his $8 average price. .43 on 9,000 shares. Cohen then proved that he is a long-term investor who is more interested in fixing the company than in personal gains by not selling a single stock when the stock rose to these irrational levels. This is Cohen’s second 13D filing, demonstrating to the market that he is not just an entrepreneur engaged in interesting stocks, but an activist investor with an owner/operator who is passionate about restoring poorly run businesses, especially in the retail/consumer industry. Clearly, his strategic and operational qualifications in building and running a business in the digital age give him immense credibility. Moreover, he only invests his own money, which certainly distinguishes him from most administrators and even activists.

What is going on?

On March 6, RC Ventures (RCV) sent a letter to the company’s board of directors urging them to improve operations and maintain the right inventory mix to meet demand while exploring strategic alternatives, including separate from buybuy Baby and a complete sale of the company.

Behind the scenes

This is a different situation than GameStop. It’s a company with a new CEO, declining same-store sales, and a strategy that hasn’t worked. It also has an incredibly valuable asset that is not reflected in its share price – the buybuy Baby activity, which is the number one priority. The company needs to seriously look into how to monetize that asset, which could be worth more than the entire company right now, and in pursuing a strategic transaction for that asset it would make sense to include a company-wide sale as well. to investigate.

In addition, the company must focus on business operations. Management spreads itself very thinly and focuses on everything from product mix to revenue growth to private label to capital allocation and balance sheet. It should instead focus deeply on a few core issues. Ryan Cohen has grown Chewy by focusing on one thing: providing a great customer experience. Chewy, GameStop and BBBY are all somewhat commoditized companies, which is how you succeed in commoditized retail. This means competitive prices, fast shipping, a good product selection and great customer service. That should be the focus of management. In addition, Bed Bath & Beyond could have better digital penetration, as buybuy Baby does.

The company has been the subject of recent shareholder activism. On May 28, 2019, Legion Partners, Macellum Capital and Ancora Advisors accepted four board seats for John E. Fleming, Sue E. Gove, Jeffrey A. Kirwan and Joshua E. Schechter. The three funds have sold their positions, but all four of their directors are currently on the board. Ryan Cohen has stated that he is not interested in going on this board, probably because he is still heavily investing his time in GameStop, which is far from over. A reasonable outcome here would be to settle for three new, independent board seats with the formation of a Strategic Alternatives Committee with at least one RC Ventures director on the committee, if not at the head of it. Ryan Cohen is somewhat new to the activism game, but he shouldn’t be taken lightly. He has the money, the resources and the conviction to launch a full-blown activist campaign if he is ignored.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.

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