Bed Bath & Beyond shares soar on word that GameStop’s Ryan Cohen has a big stake — and bigger demands
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A plush bed for Poochie... Shares of Bed Bath & Beyond soared as much as 86% yesterday after Chewy founder Ryan Cohen disclosed a nearly 10% stake in the battered housewares chain. Cohen’s an activist investor who made his first fortune selling his pet-food biz Chewy to PetSmart for a reported $3.4B. He later became chair of GameStop’s board, promising an ecommerce turnaround. Now he’s eying BB&B:
- Just don’t touch the coupons: In a letter, Cohen told BB&B’s board to hone its focus, pay execs in stock to spur growth, think about spinning off its fast-growing Buy Buy Baby biz, and consider selling to a private-equity buyer.
- Hanging on by a Wamsutta thread: Despite a pandemic bump, BB&B’s stock is down 70% over the past decade as it’s faced steep competition from Amazon, Walmart, and Target (while the average US stock has more than doubled).
If this all sounds familiar… Cohen sent GameStop’s board a similar letter in November 2020, prompting its stock to skyrocket 27X in a Reddit-powered investment blitz two months later. When Cohen grabbed the reins shortly after, he promised to quickly expand into ecommerce. But that hasn’t happened.
It’s a big test for the meme-funding model… By pressuring BB&B to reorganize, Cohen’s jumped into a second turnaround project before completing his first: GameStop’s revenue and profit have remained nearly flat under his command. But since GS shares are still up 8X since Cohen’s original letter, the company’s raised $1.6B by selling new shares to pay off all its debts. And if Cohen succeeds in revamping GameStop’s sales, duvet covers could be next.