Three activist investor groups issued a strategic plan for Bed Bath & Beyond Inc. on April 26, outlining changes they say will deliver an earnings per share improvement of $5.00.
Legion Partners Holdings LLC, Macellum Advisors GP LLC, and Ancora Advisors LLC want to oust the company’s entire board, and has nominated 16 people, mostly former retail executives, to replace them at the company’s 2019 annual shareholders meeting.
“Under the current CEO, the Company’s operational performance is deteriorating at an accelerating pace and he must be removed immediately and replaced with a highly qualified and capable leader,” the strategic plan said.
Steven Temares has been chief executive officer since 2003.
The activist investors also want to turn around company culture by increasing focus on employee training, education and technology; reassessing its budget; reviewing and assessing non-core businesses; establishing a direct sourcing strategy and private label program to expand gross margins; and developing a merchandise architecture that resonates better with customers.
Bed Bath & Beyond announced changes to its board of directors on April 22, effective May 1. However, according to the investor groups, the changes were not enough and appear “hastily constructed.”
“We believe CEO Steven Temares must be terminated as soon as possible and new directors must be added to the board that have direct experience in the following areas: customer-centricity, retail operations, sourcing, supply chain, private label, marketing, branding, e-commerce, and turnarounds,” the group said in a statement. “That is why we carefully selected our nominees to address the long list of issues at Bed Bath which have led to prolonged poor performance and destruction of shareholder value.”
The investor groups’ board nominees include Victor Herrero Amigo, former CEO of Guess; Theresa Backes, former chief operation officer of Francesca’s; Joseph Boehm, executive vice president of retail leasing at QIC Global Real Estate; David Duplantis, former president of global marketing at Coach; Jonathan Duskin, CEO of Macellum Capital Management; Jeffrey Kirwan, former CEO of Gap; Jeremy Liebowitz, former CEO of global e-commerce at Newell Brands; Jon Lukomnik, managing partner at Sinclair Capital; John Fleming, former chief marketing officer at Walmart; Sue Ellen Gove, former COO at Zales; Janet Grove, former corporate vice chair at Macy’s; Cynthia Murray, former brand president at Chico’s; Martine Reardon, former chief marketing officer at Macy’s; Hugh Rovit, former CEO at Ellergy Somestyles and SureFit; Joshua Schechter, private investor; and Alexander Smith, former CEO of Pier 1 Imports.
According to Bed Bath & Beyond, which responded Friday to the activist groups’ strategic plan, most of the suggestions put forth by the activist investors groups are already taking place under the company’s own transformational plan or are still being considered.
“We have a committed team of associates focused on providing exceptional experiences for our customers as we continue driving improved financial results, which will lead to enhanced shareholder value,” the company said in a statement. “The board remains open to constructive feedback from all shareholders, and consistent with this approach, will consider any value enhancing perspectives from the activist group, as well as other existing and prospective shareholders, that help contribute to the ongoing efforts to achieve these objectives.”
The activist groups have declined to engage in dialogue with Bed Bath & Beyond, the company said.