Bed Bath & Beyond stock soars as RC Ventures takes a big stake

FILE: A view of a Bed Bath and Beyond store on October 03, 2019 in Daly City, California. (Photo by Justin Sullivan/Getty Images)

The investment firm of billionaire Ryan Cohen has taken a large stake in Bed Bath & Beyond and is recommending that the struggling retailer sell all or part of its business.

RC Ventures LLC has acquired a nearly 10% stake in Bed Bath & Beyond, according to a regulatory filing. RC stands for Ryan Cohen, a co-founder at Chewy, who was at heart of the GameStop meme saga last year.

Cohen built a huge following on Reddit and on social media in 2021 as smaller investors gobbled up GameStop and other meme stocks. Bed Bath & Beyond was among those companies and news of Cohen's interest sent its shares, which have tumbled 15% this year, up more than 70% at the opening bell Monday.

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In a letter sent to Bed Bath & Beyond Inc., Cohen said that declining sales can no longer be blamed on the COVID-19 pandemic, noting that other national chains are seeing sales near or exceed pre-pandemic levels. Bed Bath & Beyond has lost money for three consecutive years.

Cohen suggests in the letter the possible sale of part or all of the Union, New Jersey, company. One part of the business that could be sold or spun off, according to Cohen, is the Buy Buy Baby chain. Any money obtained from a full or partial sale could be used to pay off debt, put cash on the balance sheet and lower debt, creating more shareholder value, Cohen said.

Bed Bath & Beyond closes 200 stores due to pandemic

"The past 10 years have shown that Bed Bath faces a difficult existence in the public market. The market is not giving the company nearly enough credit for (Buy Buy Baby's) value," Cohen wrote. "A sale that can lock in a substantial premium for shareholders and provide Bed Bath the flexibility of the private market could be an ideal outcome for customers, employees and investors."

Bed Bath & Beyond issued a respons on Monday saying:  "Bed Bath & Beyond's Board and management team maintain a consistent dialogue with our shareholders and, while we have had no prior contact with RC Ventures, we will carefully review their letter and hope to engage constructively around the ideas they have put forth."

The statement went on to say:  "Our Board is committed to acting in the best interests of our shareholders and regularly reviews all paths to create shareholder value. 2021 marked the first year of execution of our bold, multi-year transformation plan, which we believe will create significant long-term shareholder value."

With the Associated Press