Polished.com Inc (POLCQ)

[bar1080]

'Status quo unacceptable': Activist investor targets Build-A-Bear, Goedeker's"


"ST. LOUIS — David Kanen sent two letters to St. Louis companies on a recent Thursday, and neither was very friendly.

The Florida-based investor told appliance retailer Goedeker’s that more than half its board needs to go.

The other letter hammered Build-A-Bear for lackluster revenues, declared its CEO overpaid, and suggested board members were asleep at the wheel.

Kanen also listed a number of opportunities he said Build-A-Bear had missed that executives needed to seize.

“The status quo is unacceptable,” Kanen told the teddy bear seller.

And just like that, the two companies were put on notice. Kanen, a former A.G. Edwards broker, is an activist investor, one of a special class known for writing frankly worded missives laying out struggling companies’ problems and demanding improvement in a hurry.

His firm, Kanen Wealth Management, managed $197 million in assets as of Dec. 31. By his own account, he’s gotten what he wants about a half-dozen times in as many years and secured favorable results for clients and companies. But it’s not easy: Executives can shun the advice, returns can be slow, and sometimes, he has to call for new leaders to right the ship.

In response, Goedeker’s CEO Albert Fouerti called Kanen’s complaint a “disturbing” distraction, and said Kanen and the rest of his nominees to take control of the board lack the skills to run an e-commerce company.

Build-A-Bear CEO Sharon Price John indicated the company is already doing several things Kanen wants as it looks to ride a pandemic-related boom back to long-term prosperity.

“The people at Build-A-Bear aren’t stupid,” said Jason Long, founder of local consulting firm Eye on Retail.

Kanen, 55, was born in Queens, New York, and grew up on Long Island. He went to college at Jacksonville University in Florida, where he majored in marketing. He then worked stints at two smaller firms before joining St. Louis-based A.G. Edwards, then the largest brokerage outside New York, in 1992.

He worked there for 12 years and it left an impression: Kanen still cites advice he received from the late CEO Benjamin Edwards III on the importance of building a reputation based on results, not rhetoric. Kanen spent the next dozen years at four other firms and gradually moved from selling investments to clients to advising clients on what to buy. He started Kanen Wealth Management in 2016 and called his fund Philotimo, after a Greek word that generally describes righteous or honorable behavior.

The activist bug bit later that year. Kanen had invested in a company called MagicJack, which made a namesake device allowing users to make phone calls through their internet connection, and he didn’t like what he saw.

“They had a poor management team that just really didn’t care, the stock was very cheap, and they were adding little value,” he said. “I was very frustrated.”

Then it dawned on him: He didn’t need their permission to speak his mind. He sent an open letter excoriating the board and outlined a six-point turnaround plan in August 2016. He got a man on the board six months later, and within a year, the company was bought out at a nice premium."

https://www.stltoday.com/business/local/the-status-quo-is-unacceptable-activist-investor-targets-build-a-bear-goedekers/