REUTERS: Bed Bath & Beyond Inc's long-time Chief Executive Officer Steven Temares came under pressure on Tuesday after activist investors called for his ouster and the replacement of the entire board, sending the company's shares up as much as 30 percent.
An investor group comprising Legion Partners Asset Management LLC, Macellum Advisors GP LLC and Ancora Advisors LLC disclosed a combined stake of about 5 percent in the company and also said it was seeking a review of options, including a sale, for all of the home furnishing retailer's non-core brands.
The Wall Street Journal reported on Monday that a possible sale could include brands such as Buy Buy Baby and Cost Plus World Market.
Bed Bath & Beyond has struggled to keep pace with changing consumer tastes and shopping habits over the years, with sales growth spiraling down to just 1.1 percent last year compared to over 22 percent in 2003, when Temares took over as CEO.
The company's shares have fallen for the last five years, losing over 85 percent of their value. In contrast, peers Lowe's Cos Inc and Home Depot Inc have gained 46 percent and 52 percent, respectively, over the same period.
"Irrespective of the elevated capital investment of the past several years (mostly in digital technology and fulfillment), management has been slow to invest in its stores ... This will likely add credibility to any activist style campaign," Raymond James analyst Bobby Griffin said.
The trio of investors also said excessive pay packages and a failure to hold management accountable necessitate a change in a majority of the board.
The group nominated 16 board candidates including former Gap Inc executive Jeffrey Kirwan and former Pier 1 Imports Inc CEO Alexander Smith.
The company in response said it was "open to the views" of its shareholders and valued constructive input.
"Our board of directors and management team remain committed to creating value for all shareholders by transforming our company to best position Bed Bath & Beyond for long-term success, and will continue to take actions to achieve these objectives," a company spokesperson told Reuters.
The company's shares were last trading up 28 percent at US$17.75 after touching a high of US$18.09.
(Reporting by Aishwarya Venugopal and Uday Sampath in Bengaluru; Editing by Maju Samuel)