Bed Bath & Beyond shares extended gains on Wednesday, fueled by its continued popularity among retail investors. As of the time of publication, the stock is up more than 130% in the past five days and more than 66% year to date.
The latest retail trading activity comes after an amended 13D filing with the U.S. Securities and Exchange Commission from RC Ventures, a venture capital firm owned by Chewy.com co-founder and GameStop chair Ryan Cohen.
According to the filing, RC Ventures beneficially owns 9,450,100 Bed Bath & Beyond shares, or an 11.8% stake, including 1,670,100 shares underlying certain call options. The options, which expire in January 2023, were purchased at strike prices between $60 and $80. A call option gives the buyer the right to buy a stock at a given price for a fixed period of time.
Cohen's position in Bed Bath & Beyond has not changed since RC Ventures amassed a 9.8% stake in March. Instead, the company has lowered its total amount of outstanding shares, making Cohen's stake a larger percentage.
Bed Bath & Beyond
In a letter disclosing the initial 9.8% stake, Cohen called on Bed Bath & Beyond 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 and a full sale of the company."
Since then, Bed Bath & Beyond has added three new independent directors to its board and committed to explore strategic alternatives for the company’s buybuy Baby business. It has also replaced former chief executive Mark Tritton and discontinued Wild Sage, a private brand of bedding, decor and furniture launched in June 2021.
Independent board director Sue Gove is serving as interim CEO as the company searches for a permanent replacement. In addition, Mara Sirhal, Bed Bath & Beyond's general merchandise manager of health, beauty and consumables and Laura Crossen, senior vice president of treasury, tax, and finance transformation have been tapped as chief merchandising officer and accounting officer, respectively.
Gove said during Bed Bath & Beyond's latest earnings call in June that the company would focus on driving traffic to its stores and digital platforms in the near term.
As for the long-term, the focus will be on stabilizing its supply chain, reducing costs, lowering inventory and strengthening its balance sheet. In addition, she teased that a potential sale of the buybuy Baby business remains an option on the table.
Bed Bath & Beyond executives expect same-store sales to improve sequentially in the second half of fiscal year 2022.
The company will also reduce its planned capital expenditures in fiscal 2022 by a minimum of $100 million to approximately $300 million and has retained Berkeley Research Group (BRG), a leading retail advisory firm, to focus on cash, inventory and balance sheet optimization.