The activist investors believe that selling Cost Plus World Market, Christmas Tree Shops, PersonalizationMall and Buy Buy Baby could generate $1.4 billion.

(Bloomberg)—The activist investors in Bed Bath & Beyond Inc. say the retailer could unlock about $1.9 billion of value if it were to hire a new chief executive officer, improve inventory and explore selling non-core assets, including Cost Plus World Market, Christmas Tree Shops, PersonalizationMall and Buy Buy Baby. Bed Bath & Beyond is No. 60 in the Internet Retailer 2018 Top 500.

Legion Partners Asset Management, Macellum Capital Management and Ancora Advisors proposed those changes and others on Friday in a 168-page report with their diagnosis of Bed Bath & Beyond’s problemsfrom stagnant sales to “excessive” pay of the CEOalong with their solutions for fixing them. These include a 100-day plan to improve retail performance and replacing chief Steve Temares, who they argue has overseen an underperformance relative to peers since he was appointed in 2003.

“Under the current CEO, the company’s operational performance is deteriorating at an accelerating pace and he must be removed immediately and replaced with a highly qualified and capable leader,” the group said.

In response to the growing pressure from the investors, the company  named an independent chairman and replaced five directors this week. It also said it would form a committee to review its transformation strategy and structure. The company has previously said it invited the activists to participate in a board refreshment program, which they turned down.

Those moves were “too little, too late,” the activists said Friday.

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The investors want Bed Bath & Beyond to explore selling the company’s non-core retail businesses, which include Cost Plus World Market, Christmas Tree Shops, PersonalizationMall and potentially Buy Buy Baby as well. A sale of non-core assets could generate about $1.4 billion, they said.

Bed Bath & Beyond wasn’t immediately available for comment shortly after the release of the activists’ report.

Investors call for Bed Bath & Beyond to fix its ‘archaic’ supply chain

The trio of investors also want the company to address what they call an “archaic” supply chain, “bloated” cost structure, and executive compensation they said is excessive.

Bed Bath & Beyond needs to revamp its product assortment to follow consumer trends and improve online sales and marketing, among other measures, the investors said. The company didn’t even mention “Amazon” on a conference call until December 2016, they argue, highlighting how reticent management has been to embracing change in the retail sector.

If the Union, New Jersey-based retailer were to follow its recommendations, the company would achieve more than $5 per share in annual earnings, up from $3.12 a share in 2018. It could also generate more than $600 million in annual free cash flow in the next three to five years.

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The group, which launched a proxy fight at Bed Bath & Beyond in March, reiterated its call for shareholders to support their slate of nominees for the board.

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