What happened

Shares of Bed Bath & Beyond (NASDAQ:BBBY) jumped more than 25% on Tuesday morning after a group of activist investors disclosed a combined 5% stake in the retailer and said they intend to push for changes including an overhaul of the retailer's board of directors.

So what

The investor group, which includes Legion Partners Asset Management, Macellum Advisors GP, and Ancora Advisors, in a statement said the "magnitude of value destruction necessitates wholesale board and leadership changes," noting that since 2015 the stock has lost more than 80% of its value.

Towels arranged on a made bed.

Image source: Getty Images.

The group criticized "management's lack of success in adapting its business model to a changing retail landscape," but said the business has "tremendous potential with the right board and management team in place." The investors say they see "significant opportunities to unlock substantial value," including modernizing merchandising, marketing, and sourcing policies.

The investors are nominating 16 independent candidates to the company's board, including former Gap executive Jeffrey Kirwan and former Pier 1 Imports CEO Alexander Smith.

Check out the latest earnings call transcript for Bed Bath & Beyond.

Now what

As the investors note, Bed Bath & Beyond has been struggling for a long time, though the company did have a better-than-expected holiday season in 2018. Investors have been clamoring for fresh ideas, so it's no surprise that the entry of activists pushing for change caused the stock to jump higher.

It's worth noting that activist investors have a mixed track record of success, and no new strategy can change the fact that Bed Bath & Beyond is a niche company operating in a challenging retail environment. The shares are having a great day on Tuesday, but it will take time to see how this story progresses and determine how much higher they can go.