That was quick.
Bed Bath & Beyond (BBBY) is close to reaching a settlement with GameStop executive chairman Ryan Cohen, according to a Bloomberg report on Friday. The deal could see three board members added to Bed Bath & Beyond, the report said.
Representatives for Cohen and Bed Bath & Beyond didn't immediately reply to Yahoo Finance's request for comment.
Chewy billionaire Cohen disclosed a 9.8% stake in Bed Bath & Beyond earlier in March.
Cohen said in a scathing letter to Bed Bath & Beyond that the company's execution under CEO Mark Tritton has bordered on terrible, compensation is not realistic and the business should be split up (Buy Buy Baby business sold off) and then sold entirely to financial sponsors (aka private equity).
Cohen believes Bed Bath & Beyond could unlock billions in shareholder value by narrowing its focus and selling itself in parts.
"We have carefully assessed Bed Bath’s assets, balance sheet, corporate governance, executive compensation, existing strategy and potential alternatives. While we like Bed Bath’s brand and capital allocation policy, we have concerns about leadership’s compensation relative to performance and its strategy for reigniting meaningful growth. Approximately 18 months after releasing a 170-page cover the waterfront plan, the Company is struggling to reverse sustained market share losses, stem years-long share price declines and navigate supply chain volatility. Meanwhile, the company’s named executive officers were collectively awarded nearly $36 million in compensation last fiscal year — a seemingly outsized sum for a retailer with a nearly $1.6 billion market capitalization," Cohen said in a letter obtained by Yahoo Finance.
Bed Bath & Beyond's once promising turnaround has hit a brick wall as the company has confronted pandemic-driven supply chain challenges and issues executing on a sweeping plan to remake the store shopping experience. A decision several months to pullback on coupons was not well-received by consumers.
And all of this has shown up in Bed Bath's financials and communication to Wall Street. Sales for the just completed three-month period plunged 28% year-over-year. Adjusted operating profits fell $80 million from a year ago. When the company reported its results in early January, it outlined current quarter adjusted earnings of $0 to $0.15. The Street at the time was looking for $0.70.
The stock has plunged 47% from a 52-week high on June 2 (before Monday's reaction to Cohen's involvement).
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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