Ryan Cohen brings an activist approach to Bed Bath & Beyond


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

Michael Nagle | Bloomberg | Getty Images

Company: Bed Bath & Beyond (BBBY)

Activist: RC Ventures

What’s Happening?

Behind the Scenes

This is a different situation from GameStop. It is a company with a first-time CEO, declining same-store sales and a strategy that has not been working. It also has an incredibly valuable asset that is not reflected in the stock price – its buybuy Baby business, which is priority number one. The company needs to seriously explore monetizing that asset, which could be worth more than the entire company right now, and while pursuing a strategic transaction for that asset it would make sense to also explore a sale for the entire company.

Aside from this, the company needs to focus on operations. Management has been spreading itself very thin, focusing on everything from product mix to sales growth to private label to capital allocation and balance sheet. It needs to focus deeply on a few core issues instead. Ryan Cohen grew Chewy by focusing on one thing – providing a great customer experience. Chewy, GameStop, and BBBY are all somewhat commoditized businesses, and that is how you succeed in commoditized retail. This means having competitive pricing, fast shipping, a good product selection and great customer service. That is where management’s focus should be. Moreover, Bed Bath & Beyond could have better digital penetration like buybuy Baby does.

The company has been the subject of recent shareholder activism. On May 28, 2019, Legion Partners, Macellum Capital and Ancora Advisors settled for four board seats for John E. Fleming, Sue E. Gove, Jeffrey A. Kirwan and Joshua E. Schechter. The three funds have sold down their positions, but all four of their directors currently serve on the board. Ryan Cohen has stated that he is not interested in going on this board, likely because he is still heavily investing his time in GameStop, which is far from over. A reasonable outcome here would be to settle on 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 heading it. Ryan Cohen is somewhat new to the activism game, but he should not be taken lightly. He has the money, resources and conviction to commence 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.