Bed Bath & Beyond inventory now increased by 55% after GameStop Chairman’s stake was declared

After GameStop chairman Ryan Cohen announced he owned 10% of Bed Bath, the commodity trader saw its shares soar.

Bed Bath & Beyond Inc (NASDAQ:BBBY) shares are up 65% in premarket trading on Monday, March 7, after GameStop (NYSE:GME) Chairman Ryan Cohen revealed his stake. According to Cohen, he currently has a 10% stake in the leading commodity retailer through his investment company RC Ventures.

Now BBBY is up 55%.

Additionally, Cohen also gave a scathing assessment of Bed Bath’s recent operations and accomplishments. In a letter to the retailer’s board of directors, the chairman said Bed Bath was struggling to recoup losses in market share. Additionally, Cohen pointed out that the retail chain, which operates in the United States, Canada, Mexico and Puerto Rico, is facing supply chain issues. Cohen offered a solution in the same letter, suggesting that Bed Bath consider a sale to private equity while also individualizing its Buy Buy Baby chain. Cohen’s letter specified:

“We believe Bed Bath will need to narrow its focus to strengthen operations and maintain the right inventory mix to meet demand, while also evaluating strategic alternatives, including the separation of Buybuy Baby and an outright sale of the business. “

Cohen’s letter also fired at Bed Bath’s top executives for allegedly showing insensitivity during the company’s underperformance. He accused the company’s CEO, Mark Tritton, of receiving excessive compensation from Bed Bath during his difficult times.

In response, Bed Bath confirmed it had received Cohen’s letter and went on to explain in a statement:

“We will carefully examine your letter and hope to engage constructively with the ideas you have put forward. 2021 marked the first year of execution of our bold, multi-year transformation plan, which we believe will create significant long-term shareholder value.”

Additionally, Bed Bath noted that prior to Cohen’s writing, it had no prior contact with RC Ventures.

GameStop’s chairman’s speech to Bed Bath represents the latest case of investor frustration with the merchandise retail chain

Cohen’s letter is another occurrence from Bed Bath dealing with a disgruntled investor. In 2019, the retail chain settled a dispute with a trio of activist investors that had dragged on for months. Then came the stumbling block – in part with the addition of four new members to Bed Bath’s board. Additionally, the three activists at the time criticized Bed Bath’s e-commerce presence in relation to contemporaries like Amazon (NASDAQ:AMZN).

Following the settlement, Bed Bath brought on board former Target executive Mark Tritton as the new president and chief executive officer. Tritton’s initial appointment sent the company’s shares up 21%, sparking investor optimism for improved fortunes. The optimistic expectations at the time were not misplaced given Tritton’s rich merchandising experience and success at Target.

Since his resumption at the helm of Bed Bath, Tritton has taken a number of corrective actions within the company. These include closing a large number of underperforming Bed Bath locations and selling non-core assets like Cost Plus World Market and Christmas Tree Shops. In addition, the former Target executive has also ramped up stock buybacks, revamped stores, launched multiple private labels and weathered the pandemic. Still, Cohen maintains that Bed Bath is better off in the hands of a private equity owner.

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Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories down to the bare minimum so anyone, anywhere can understand them without too much background knowledge. When he’s not deep in crypto, Tolu enjoys music, loves to sing and is an avid movie buff. Bed Bath & Beyond inventory now increased by 55% after GameStop Chairman’s stake was declared

Caroline Bleakley

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