Bed Bath & Beyond, GameStop's Ryan Cohen enter cooperation agreement

Bed Bath & Beyond has entered into a cooperation agreement with GameStop chairman and Chewy.com founder Ryan Cohen after his investment firm, RC Ventures, acquired 9.8% of the retailer's outstanding shares earlier this month. 

Bed Bath & Beyond will add three new independent directors to its board with expertise in capital allocation, corporate governance, strategic planning and transactions: Shelly Lombard, Marjorie Bowen and Ben Rosenzweig. Plus, a four-member strategy committee will be formed to focus on "exploring alternatives to unlock greater value from the Company's buybuy BABY banner." 

The board will be temporarily expanded to 14 members before reverting to 11 members following the company's annual meeting.

"Our Company and Board have 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. Our buybuy BABY business is a tremendous asset, and we are committed to unlocking its full value," Bed Bath & Beyond CEO Mark Tritton said in a statement. "As we move forward, our goals will continue to focus on delivering value for our shareholders, enhancing experiences for our customers, executing on the transformation throughout our business, and creating new and exciting opportunities for our dedicated employees across all our banners."

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Tritton was forced to move after Cohen targeted the poor-performing retailer. 

In a letter filed with the Securities and Exchange Commission disclosing the stake, Cohen warned that Bed Bath & Beyond is "struggling to reverse sustained market share losses, stem years-long share price declines and navigate supply chain volatility." He also expressed concern about the compensation of Bed Bath & Beyond's leadership, including Tritton, "relative to performance and its strategy for reigniting meaningful growth."

According to Cohen's letter, Bed Bath & Beyond has seen an approximately 29% decline in full-year sales from pre-pandemic levels during Tritton's tenure. Tritton, according to the letter, received approximately $27 million in pay over the past two years.In its most recent quarter in January, Bed Bath & Beyond reported a 14% year-over-year drop in core sales and a 7% year-over-year drop in same-store sales. 

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Under Tritton's direction, Bed Bath & Beyond has remodeled stores, closed underperforming stores, introduced new private label brands and much more. 

However, Cohen argued that its "highly-publicized and scattershot strategy is not ending the tailspin that has persisted before, during and after the pandemic’s nadir" and Tritton's appointment.

"We believe Bed Bath needs to narrow its focus to fortify operations and maintain the right inventory mix to meet demand, while simultaneously exploring strategic alternatives that include separating buybuy Baby, Inc. ("BABY") and a full sale of the Company," Cohen added. 

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The cooperation agreement comes as Cohen has been working to turn GameStop from a struggling brick-and-mortar video game retailer into an e-commerce behemoth. He joined GameStop's board in January 2021 after RC Ventures amassed a 13% stake in the company and was elected as its board chairman in June. 

"The resolution announced today represents a positive outcome for all of Bed Bath's shareholders," Cohen said in a statement. "By refreshing the Board with shareholder-designated individuals who possess capital markets acumen and transaction experience, the Company is well-positioned to review alternatives for buybuy BABY. I appreciate that management and the Board were willing to promptly embrace our ideas and look forward to supporting them in the year ahead."