Signage is posted outside of 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 has sent a scathing letter to the board of directors of the new Bed Bath and Beyond Friday, saying it had refused to answer questions from shareholders and was engaging in what the investment firm called unprecedented “bad behavior.”
The firm, which owns a 9.6% stake in the company and says it is not an activist fund, has criticized the board for a series of misdeeds, including canceling planned investor conferences and misrepresenting facts about the old fund. The ouster of CEO Jonathan Johnson.
“We have attempted to engage constructively with Investor Relations, senior management and the Board over the past few months, making suggestions on best practices that can preserve and enhance value, and most recently highlighting actions taken by management and the board of directors that appear to be destroying shareholder value,” states the letter, written by JAT founder John Thaler.
“We’ve taken a more active stance with Beyond because, frankly, I’ve never seen such poor behavior from a board in my career. The things I’ve heard, the things I’ve been told directly, and the actions I’ve witnessed are in a category I’ve never seen.
Beyond was previously known as Overstock.com, which bought Bed Bath after going bankrupt and renamed. Before its name change, Beyond struggled with slow sales and a declining market capitalization. After its first quarter under the new Bed Bath name, results were mixed with sharp declines in sales and profits.
The company did not return a request for comment.
Earlier this month, JAT called on Beyond to fire Johnson. A few days later, the company announced his departure.
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 “the ability of shareholders to have their say.” The company also accused the board of being misleading about Johnson’s decision to leave the company and bluntly said he was “fired.”
“Rather than fire Johnson and say so publicly (a statement that would have been welcomed by everyone involved), the Board decided to write a press release with Jonathan suggesting that he had resigned, and even making the statement “ridiculous that he and the Board had jointly concluded that ‘the time has come’ for a leadership transition,” the missive reads.
“Now is the perfect time? In the midst of a corporate rebranding effort, just as the company is embarking on a $150 million marketing campaign? And it coincides by chance with the shareholders calling for Johnson’s departure? Writing a press release that distorts the facts and gives misleading descriptions of the situation… reinforces the perception that the Board is engaged in a process of self-preservation and dealing internal.
Meanwhile, JAT tapped Marcus Lemonis, the CEO of Camping World and TV personality who starred in CNBC’s “The Profit” to take over the management of the company. He joined the Overstock board of directors last month and welcomed his transition to Beyond Inc.
JAT renewed those calls in Friday’s letter and accused the board of being “suspicious” of Lemonis, sidelining him and withholding his expertise.
“In one of the rare instances where I was able to speak with a board member about why Marcus Lemonis was not allowed to help run the company, (board chair) Allison Abraham admitted to me that “She (and others) were concerned that ‘Marcus had a secret, nefarious plot,'” the letter states. “She allegedly repeated this same concern to interim CEO Dave Nielsen. When asked what this ‘nefarious plot’ could be, she admits that she does not know.”
Lemonis did not respond to a request for comment.
JAT called on Beyond’s board to answer its questions once and for all, and for everyone from suppliers to sell-side analysts to demand more transparency.
“I very much wish that the board would be forced to explain what it is doing. This is not an unreasonable request. The actions cited below that the board has taken in the last 60 days appear to be to the detriment of the company and shareholders,” the letter states. “This Council has refused to explain why it made these decisions.”
Read the full letter below: