The group – Legion Partners, Macellum Advisors, and Ancora Advisors – blames cluttered stores and a confusing pricing strategy for Bed Bath & Beyond's prolonged accident.
"Stores contain a dizzying array of too similar items and lack the experience customers demand," the group said in a news release on Tuesday. It is argued that Bed Bath & Beyond has been clearly defined as good, better, best strategy on merchandise at different prices. That's key to attracting a wide range of shopping demographics.
The group wants Bed Bath & Beyond to product selection and be up to the in-store experience to drive traffic back to stores.
Bed Bath & Beyond's shrinking profit margins also came under attack. Here, the group argued that Bed Bath & Beyond did not sell enough of its own private-label brands, which carry higher margins than outside brands, and the retailer relied too heavily on promotions
To improve margins, the activist group proposed Bath & Beyond's "non-core businesses," such as online home decor website One Kings Lane
Bed Bath & Beyond's stock rocketed up around 25% Tuesday, signaling that Wall Street supports and over. 1
Despite the tough competition , the activist group says there's still hope for Bed Bath & Beyond. The company just needs leaders and a fresh game plan.
"Bed Bath has tremendous potential with the right board and management team in place," the investor group said. "Shareholders must demand change now before the failures become irreversible."
In response to the activist push, Janet Barth, vice president of investor relations at Bed Bath & Beyond, said "we are open to the views of our shareholders and value constructive input. "
Barth said Bed & Beyond is already making progress on transforming the company. The company is eliminating some merchandise from stores to reducing and focusing on winning college students and their parents with an improved assortment.
Bed Bath & Beyond will also launch six home furnishing brands in the next two years. The first of those brands, Bee & Willow, debuted earlier this month.
—CNNBusiness' Jordan Valinsky contributed to this article.