I’ve had a soft spot for Bed Bath & Beyond since an ex-girlfriend took me there to buy sheets there some two decades ago. It was before the ubiquitous age of Amazon, and I was delighted to find a wide assortment of household products at great prices in a free-standing store. My ex educated me about another great BB&B benefit: The store honored coupons even past their expiry dates.

BB&B has badly declined in recent years. Its cluttered stores are more disorganized, customer service is practically non-existent, their cash registers are often malfunctioning causing long lines at checkout, and if a recent experience is an indication, they now hire or promote inexperienced jerks as store managers. Most disappointing of all is the company’s abandonment of its longstanding policy of making it easy to return products and its recent plans to curtail its coupon issuance.

Says my ex: “I have a panic attack every time I have to go to one of those stores now!!  It’s like an “As Seen on TV” showroom with a few pricey duvet covers thrown in the mix.” 

BB&B reported its first loss since going public in 1992, and its stock is down more than 80 percent since its 2014 high. The company’s been rife with nepotism and board conflicts. Its corporate governance ranked among the worst.

So, it’s hardly surprising that BB&B has fallen into the clutches of a trio of “activist” investors, a fancy term for hedge funds who think they know better about running businesses than the managers of companies they invest in. Although the Masters of the Universe collectively own just a small percentage of stock, they’ve managed to turf out BB&B’s board, its founders, and the company’s very overpaid CEO.

BB&B’s activists say they’ve been successful turning around some retail businesses I’ve never heard of or I’m mildly familiar with, but if they can save BB&B it would be a “Man Bites Dog” story. The retail graveyard is overflowing with once venerable businesses that were destroyed or mangled under hedge fund or private equity ownership, including Sears, Toys R Us, Nine West/Jones, Payless ShoeSource, Gymboree, and Sport’s Authority.

“Hedge funds are systematically destroying jobs across the nation,” Carrie Gleason, campaign manager for Rise Up Retail, a worker advocacy group, told CNN. “From Toys ‘R’ Us to Sears, these financial predators are extracting the value out of these retail establishments, forcing the closure of thousands of stores, and throwing tens of thousands of workers into the streets.”

BB&B’s activist investors have tapped Mary Winston, one of their hand- picked board members, as interim CEO. Winston, the former CFO of Family Dollar and Giant Eagle, is hardly an inspiring choice. She is possibly G-d’s gift to the Excel spreadsheet, but her number crunching expertise hardly makes her suited to quickly staunch BB&B’s customer alienation and merchandising problems. In addition to running a consulting business, Winston also sits on the boards of four other disparate Fortune 500 companies.

Mary Winston

(Corporate governance experts, including Equilar, warn about directors who sit on multiple boards being “unable to fulfill their duties due to excessive commitments.” Proxy advisor Glass Lewis recommends that shareholders vote against an executive officer who serves as a CEO and moonlights as a director on more than two public company boards. Interestingly, one of BB&B’s activist investors is Ted White, formerly Director of Corporate Governance at CalPERS)

BB&B’s activist investors have put together a detailed strategic plan to save BB&B, which includes Wall Street’s favorites “cost cutting” and a “strategic review” of non-core businesses. The plan seems well thought out, but I imagine the strategic plans to save the dozen or so retail businesses that Wall Street ruined were equally impressive. It will be interesting to see the sort of CEO who wants to execute a plan developed by their board and shareholders. Don’t be surprised if that person has a sudden urge to spend more time with his or her family after 18 months on the job.

With 65,000 employees, I hope BB&B is one of the few retailers to actually benefit from Wall Street’s wisdom. But if the company fails, or experiences widespread layoffs, it will be partly on the head of the California State Teachers’ Retirement System.

CALSTRS provided significant funding for Legion Partners Asset Management, one of BB&B’s activist investors.  Another example of working-class pension money being used to fuel Wall Street’s greed and ambitions.

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