Dive Brief:

• Bed Bath & Beyond entered into a cooperation agreement with Ryan Cohen and his activist fund, RC Ventures, who together own nearly 10% of the retailer's outstanding shares.
• As part of the deal, Bed Bath & Beyond is adding three directors of RC Ventures' choosing to its board, effective immediately. RC Ventures has agreed to support the board's full slate of directors at the 2022 annual meeting and abide by customary standstill provisions. 
• Two of the RC Ventures-designated directors are set to join a new four-person group focused on "exploring alternatives to unlock greater value" from the retailer's BuyBuy Baby business. Cohen had previously suggested a potential spinoff of the unit.

Dive Insight:

About a month has passed since Cohen, who founded the digital pet food retailer Chewy, disclosed the stake his fund has taken in Bed Bath & Beyond. Following that came the usual scathing activist letter, chiding the retailer for a transformation strategy that "looks far better in a PowerPoint deck than it does in practice." 

Cohen spent the past year undertaking a sweeping activist campaign at GameStop, where Cohen installed himself as chairman and set about remaking the company's management and priorities. Under Cohen's steering, GameStop has announced its entry into the world of non-fungible tokens and has focused more on faster shipping and customer experience. Its losses have also widened over the first year of Cohen's stewardship.

With Bed Bath & Beyond, Cohen said the retailer should have focused more on its supply chain transformation after hiccups cost the retailer sales and profits last year. More dramatically, he suggested a possible separation of BuyBuy Baby — which Cohen said could be more valuable than the entirety of Bed Bath & Beyond — and even a potential sale of the entire company to a financial sponsor (typically a shorthand for private equity).

Bed Bath & Beyond CEO Mark Tritton, who came from Target to lead a turnaround, made a few appearances in Cohen's letter as well. Cohen called out Tritton's compensation as being higher than some chiefs at larger retailers. Cohen also noted, "Almost two-and-a-half years into Mr. Tritton's tenure, Bed Bath has underperformed the S&P Retail Select Industry Index by more than 58% on an absolute basis and is looking at an approximately 29% decline in full-year sales from pre-pandemic levels."

In the release announcing the retailer's deal with Cohen, Tritton said that the company has "always been committed to evaluating all options to maximize long-term shareholder value, and we look forward to integrating our new directors' ideas to drive our continued transformation."

Coming to Bed Bath & Beyond's board at Cohen's behest are Marjorie Bowen, who has been a director at Centric Brands, Genesco, Navient, Sequential Brands and Talbots; Shelly Lombard, a consultant who has served on boards including Alaska Communications Group and Spartacus Acquisition Corporation; and Ben Rosenzweig, a partner at Privet Fund Management and former analyst with Alvarez and Marsal.

Cohen said in the announcement that by approving directors who "possess capital markets acumen and transaction experience, the Company is well-positioned to review alternatives for buybuy BABY."