UPDATE: April 22, 2019: The investor group, which includes Legion Partners Holdings, Macellum Advisors GP and Ancora Advisors, released a statement later on Monday criticizing Bed Bath & Beyond's new board of directors. In a statement emailed to Retail Dive, the group said the actions are "not nearly enough when measured against what is needed to address the issues with the current Board and management, including that CEO Steven Temares must be held accountable for the Company's prolonged poor performance and destruction of shareholder value." The group also said that the retailer's announcement lacked a "detailed strategic vision for driving value creation at Bed Bath." Meanwhile, the activist group also said the candidates it previously nominated for the board "have worked hard to develop a strategic plan for Bed Bath going forward, which will be released in the coming days."
Bed Bath & Beyond on Monday announced the transformation of its board of directors in response to pressure from a group of shareholders. The board will consist of 10 directors, rather than 12, with nine being independent and six being women, according to a company press release. Five current independent directors will step down.
The company also announced Co-Founders Warren Eisenberg and Leonard Feinstein will retire from the board and transition into the role of co-founder, co-chairmen emeriti. Patrick Gaston, who was the lead independent director, has assumed the role of independent chairman effective immediately. In addition, the board will create a Business Transformation and Strategy Review Committee
In March, an activist group including Legion Partners Holdings, Macellum Advisors GP and Ancora Advisors nominated 16 independent candidates to overturn the company's current 12-person board, and called for the ouster of CEO Steven Temares.
Bed Bath & Beyond's performance came under fire from a group of investment firms and their affiliates last month, and its turmoil wasn't helped by its most recent reported earnings.
Bed Bath & Beyond said that fourth quarter net sales fell 11% to $3.3 billion and comparable sales declined 1.4%. The retailer on its earnings call also announced plans to make couponing adjustments, which promptly received criticism from the activist group.
"We were deeply concerned to hear management suggest, during the fourth quarter call, that they were going to reduce coupon availability to improve profitability," the group wrote at the time. "Our proprietary consumer survey work indicates this is a risky path to pursue given the wide range of margin enhancing opportunities available for both reducing product sourcing costs and lowering SG&A in non-customer facing areas. In our view, it does not make sense to make any couponing adjustments prior to executing on initiatives that would fundamentally improve the in-store experience for customers and drive retail traffic."
The company also reportedly laid off nearly 150 employees in March, which included less than 50 employees in its flagship store operations and less than 100 in its Christmas Tree Shops.
And so the home goods retailer caved under pressure, somewhat. Although it didn't appoint anyone nominated by the activists and made no move to fire Temares as they suggested, Bed Bath & Beyond did refresh its board. The five new independent directors include: Harriet Edelman, vice chairman of Emigrant Bank; Harsha Ramalingam, senior adviser at Boston Consulting Group; Andrea Weiss, founding partner of The O Alliance Consulting Services and CEO and founder of Retail Consulting Inc.; Mary Winston, president and founder of WinsCo Enterprises Consulting Services; and Ann Yerger, corporate governance specialist of Spencer Stuart North American Board Practice.
"As we have communicated to Bed Bath & Beyond shareholders, the Board has been undertaking a comprehensive review of its composition, governance structure and compensation practices," Gaston said in a statement. "The changes announced today reflect significant shareholder input and underscore our commitment to ensuring we have best-in-class governance. This Board transformation and refreshed governance structure is rooted in accountability, transparency and collaboration, and as we provide oversight and move the Company forward, we are committed to continuing to act in the best interest of our shareholders."