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Bed Bath & Beyond on Wednesday negotiated with a trio of activist investors discussions that had lasted for several months, announcing the appointment of four new members to its board of directors, in addition to finding a permanent replacement for the company. Former CEO Steven Temares.
Bed Bath & Beyond also agreed to form a committee that, among other things, will evaluate the potential for sales or spin-offs of underperforming companies, a source familiar with the situation told CNBC.
These companies, such as Cost World World, Buy Buy BABY, PersonalizationMall and Christmas Tree Shops total $ 1.36 billion, or about $ 10 per share, according to Legion Partners Asset Management, Macellum Advisors and Ancora Advisors.
"We are pleased to have pbaded this resolution with Bed Bath & Beyond, result of an intensive dialogue and dialogue with the company," said the group of investors in a statement. published on Wednesday. "We are optimistic about the company's efforts to find the best CEO in its clbad, capable of generating shareholder value, and applaud the board's commitment to building an even stronger future." for the shareholders. "
Operating from more than 1,000 stores in the United States and Puerto Rico, Bed Bath & Beyond is sensitive to online competition that has resulted in the bankruptcy of other shopping center retailers such as Sears Holdings and Toys "R". Us Inc. It laid off nearly 150 people in March, affecting its Christmas Tree Shops, a discount home decoration chain acquired in 2003.
The company's underperformance may have been an attractive entry point for the trio of activists, who first mobilized their approximate 5% share in March with calls to replace the entire board of directors. administration of 12 members of society. Although a complete overhaul has not taken place, the investor group has had some success since the launch of its public campaign against what it considered a "failed" execution and strategy within the company. .
"We are at an important turning point in the history of the company and, benefiting from a recently transformed board of directors, the company is committed to taking the steps that are taking place. to further improve our competitive and financial position, transforming Bed Bath & Beyond more quickly to enforce Mary Winston, Interim CEO of Bed Bath & Beyond, added in its press release Wednesday the omnichannel market and the implementation our priorities.
Bed Bath & Beyond faces significant competition from Amazon and its more adaptable competitors. Companies such as Walmart and Target have poured money into their online platforms to track the disruption of Jeff Bezos' e-commerce giant, which has become a popular option for customers wishing to purchase towels, bedding or bedding. kitchen appliances.
Bed Bath & Beyond recently attempted to enhance its in-store experience with its Next Generation initiative, which places a greater emphasis on home décor, beauty care, lifestyle products, and more. only on the reduction of stocks and congestion.
Temares praised these new stores when calling the fourth quarter results on April 10, noting that sales at Next Generation establishments were about 2.2% higher at comparable stores Bed Bath & Beyond.
"If you look at the new generation Bath Bed and the products we offer, health and beauty care, food and beverages, the rarity product, interior design … they come from different concepts. banners, "said Temares at the time. "It's all about doing more with the customer."
Ancora, Legion and Macellum were not convinced. The group then criticized Temares, in a presentation following the earnings report, for presenting disappointing sales figures over the long term and criticized his ability to "only realize a small percentage of sales". Countless initiatives ".
Activists added that Bed Bath & Beyond's shares had underperformed shareholders 'returns by 800% since Temares took the reins in 2003. The company announced Temares' resignation on May 13, ending its mandate of 16 years at the head of the company.
Since its largest market capitalization in the North of $ 17 billion in 2012, Bed Bath & Beyond has lost approximately 90% of its value and was valued at $ 1.78 billion. The stock is down more than 24% in the last 12 months compared to competitors such as Target and Walmart, both of which outperformed the stock market over the same period.
Bed Bath & Beyond nonetheless defended its business practices more widely, claiming in April that "the activist group has steadfastly refused to engage in a constructive dialogue with society and has chosen to disclose its perspectives only in front of a public forum. . "
"The board remains open to constructive feedback from all shareholders and, in line with this approach, will consider any prospects for value enhancement," added Bed Bath & Beyond at the time.
The campaign activists also announced a major restructuring of the board of directors of the company. In addition to the new appointments announced on Wednesday, the company announced last month the establishment of five new independent board members, replacing some of the directors, including co-founders Warren Eisenberg and Leonard Feinstein.
The latest additions by John Fleming, Sue Gove, Jeffrey Kirwan and Joshua Schechter – all of whom have been nominated by the militant coalition – will allow 13 directors to form a board of directors.
-CNBC & # 39; s Lauren Thomas and Lauren Hirsch Contributed reports.
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