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Investor JAT Capital sends scathing letter to new Mattress Bathtub & Previous board over CEO ouster, emptiness

Signage is displayed outdoors a permanently closed Mattress Bathtub & Previous retail retailer in Hawthorne, California, on May perhaps well 1, 2023. 

Patrick T. Fallon | AFP | Getty Photos

Investment company JAT Capital sent a scathing letter to the board of the new Mattress Bathtub & Previous on Friday pronouncing it has refused to acknowledge questions from shareholders and is enticing in what the funding company called unprecedented “miserable behavior.” 

The company, which has a 9.6% stake within the firm and claims it is far now not an activist fund, excoriated the board for a series of misdeeds, including canceling planned investor conferences and twisting the facts about worn CEO Jonathan Johnson’s ouster.

“We now include attempted to include interaction constructively with investor members of the family, senior management and the Board of Directors in most modern months, making suggestions of handiest practices that would possibly well support and toughen price, and extra currently pointing out actions taken by management and the board that seem like destroying shareholder price,” the letter, penned by JAT’s founder John Thaler, states. 

“We now include taken the extra active posture with Previous because, fairly frankly, I include by no formula viewed such miserable behavior by a Board in my career. The issues that I include heard, the issues which had been spoken on to me, and the actions I include witnessed are in a class that I include by no formula viewed.” 

Previous used to be beforehand identified as, which supplied Mattress Bathtub out of financial difficulty and rebranded. Ahead of its rebrand, Previous had been grappling with sluggish sales and a dwindling market cap. After its first quarter because the new Mattress Bathtub, results had been blended with steep declines in sales and earnings. 

The firm didn’t return a seek info from for comment.

Earlier this month, JAT called on Previous to fireplace Johnson. Days later, the firm introduced he used to be stepping down.

In its letter, dated Friday, JAT puzzled why Johnson’s board seat used to be eradicated after his ouster and mentioned it used to be an try to weaken “shareholders capability to include a bellow.” The company also accused the board of being disingenuous about Johnson’s decision to fade the firm and mentioned bluntly that he’d been “fired.”

“As an different of terminating Johnson and publicly pronouncing so (a press liberate that would possibly well had been effectively obtained by everyone fervent), the Board determined to craft a press liberate alongside with Jonathan suggesting that he had stepped down, and even making the ludicrous direct that he and the Board had collectively concluded that ‘now used to be the wonderful time’ for a leadership transition,” the missive reads.

“Now would possibly perhaps perchance be the wonderful time? Within the heart of a firm re‐branding effort, factual because the firm embarks on a $150 million marketing campaign? And that coincidentally coincides with shareholders calling for Johnson’s elimination? Writing a press liberate that twists the facts and makes disingenuous characterizations of the scheme back … furthers the idea that the Board is engaged in self‐preservation and inner dealing.”

Within the meantime JAT has called for Marcus Lemonis, the Camping World CEO and TV persona who starred in CNBC’s “The Profit,” to preserve conclude over management of the firm. He joined the Overstock board remaining month and has cheered its transition to Previous Inc. 

JAT renewed these calls in Friday’s letter and accused the board of being “suspicious” of Lemonis, pushing him to the sidelines and refusing his abilities. 

“In regarded as one of many few cases the establish I had been in a position to include interaction with a member of the Board in relation to why Marcus Lemonis wasn’t being authorized to lend a hand manage the commerce, [chair of the board] Allison Abraham acknowledged to me that she (and others) had been apprehensive that ‘Marcus has a secret unsuitable situation,'” the letter states. “She has allegedly repeated this identical scheme back to the meantime CEO Dave Nielsen. When pressed on what that ‘unsuitable situation’ would be, she acknowledges that she would now not know.” 

Lemonis informed CNBC he has no passion in being CEO of Previous nonetheless did join the board with an expectation that’d he be appointed govt chairman, which is but to occur bigger than a month into his tenure with the firm. No clear timeline used to be predicament nonetheless a variety of shareholders past JAT had been questioning what’s ahead for the firm’s board given his appointment, Lemonis mentioned.

He added he’s “disappointed” members of the family between the board and customers include reached this low-point nonetheless consents with JAT that fluctuate desires to occur.

“To be excellent I am roughly irregular to a pair of the solutions too,” he mentioned of the depend on’s JAT posed.

As far because the “unsuitable situation” he’s suspected of, Thaler mentioned he’s been requested if he’s a “trojan horse” for JAT or taking a look to buy Previous, which he both denies.

“I revel in working with agencies, or now not it is been my impress for a lengthy time,” mentioned Lemonis. “If I desired to buy the commerce this is able to now not be the formula I’d cease it.”

JAT called on Previous’s board to acknowledge its questions, once and for all, and for everyone from distributors to promote-side analysts to seek info from extra transparency.

“It is my solid desire that the Board be forced to notify what it is doing. Here is now not an unreasonable seek info from. The actions cited under which the Board has taken within the relaxation 60 days seem like to the detriment of the firm and shareholders,” the letter states. “This Board has refused to notify why they’ve made these choices.”

Be taught the stout letter under:

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