Signage is displayed outside a permanently closed Bed Bath & Beyond retail store in Hawthorne, California, on May 1, 2023.
Patrick T. Fallon | AFP | Getty Images
Investment firm JAT Capital sent a scathing letter to the board of the new Bed Bath & Beyond on Friday saying it has refused to answer questions from shareholders and is engaging in what the investment firm called unprecedented “poor behavior.”
The firm, which has a 9.6% stake in the corporate and claims it will not be an activist fund, excoriated the board for a series of misdeeds, including canceling planned investor conferences and twisting the facts about former CEO Jonathan Johnson’s ouster.
“We’ve got attempted to engage constructively with investor relations, senior management and the Board of Directors in recent months, making suggestions of best practices that may preserve and enhance value, and more recently stating actions taken by management and the board that appear to be destroying shareholder value,” the letter, penned by JAT’s founder John Thaler, states.
“We’ve got taken the more energetic posture with Beyond because, quite frankly, I even have never seen such poor behavior by a Board in my profession. The things that I even have heard, the things which have been spoken directly to me, and the actions I even have witnessed are in a category that I even have never seen.”
Beyond was previously referred to as Overstock.com, which bought Bed Bath out of bankruptcy and rebranded. Prior to its rebrand, Beyond had been grappling with sluggish sales and a dwindling market cap. After its first quarter because the new Bed Bath, results were mixed with steep declines in sales and profits.
The corporate didn’t return a request for comment.
Earlier this month, JAT called on Beyond to fire Johnson. Days later, the corporate announced he was stepping down.
In its letter, dated Friday, JAT questioned why Johnson’s board seat was removed after his ouster and said it was an attempt to weaken “shareholders ability to have a say.” The firm also accused the board of being disingenuous about Johnson’s decision to leave the corporate and said bluntly that he’d been “fired.”
“Fairly than terminating Johnson and publicly saying so (a press release that will have been well received by everyone involved), the Board decided to craft a press release together with Jonathan suggesting that he had stepped down, and even making the ludicrous statement that he and the Board had jointly concluded that ‘now was the best time’ for a leadership transition,” the missive reads.
“Now’s the best time? In the course of an organization re‐branding effort, just as the corporate embarks on a $150 million marketing campaign? And that coincidentally coincides with shareholders calling for Johnson’s removal? Writing a press release that twists the facts and makes disingenuous characterizations of the situation … furthers the perception that the Board is engaged in self‐preservation and inside dealing.”
Meanwhile JAT has called for Marcus Lemonis, the Camping World CEO and TV personality who starred in CNBC’s “The Profit,” to take over management of the corporate. He joined the Overstock board last month and has cheered its transition to Beyond Inc.
JAT renewed those calls in Friday’s letter and accused the board of being “suspicious” of Lemonis, pushing him to the sidelines and refusing his expertise.
“In one in all the few instances where I even have been able to engage with a member of the Board with regards to why Marcus Lemonis wasn’t being permitted to help manage the business, [chair of the board] Allison Abraham acknowledged to me that she (and others) were frightened that ‘Marcus has a secret nefarious plot,'” the letter states. “She has allegedly repeated this same concern to the interim CEO Dave Nielsen. When pressed on what that ‘nefarious plot’ could be, she acknowledges that she doesn’t know.”
Lemonis didn’t return a request for comment.
JAT called on Beyond’s board to answer its questions, once and for all, and for everybody from vendors to sell-side analysts to demand more transparency.
“It’s my strong desire that the Board be forced to explain what it’s doing. This will not be an unreasonable ask. The actions cited below which the Board has taken within the last 60 days appear to be to the detriment of the corporate and shareholders,” the letter states. “This Board has refused to explain why they’ve made these decisions.”
Read the complete letter below: