How much are Bed Bath & Beyond and Buybuy Baby worth?
Sources said the more valuable Buybuy Baby banner has a better chance of attracting a buyer who wants to keep it up and running. It could have fetched $630 million and $910 million last summer but Bed Bath & Beyond’s bankruptcy filing this week will likely attract “bottom feeders” interested in paying pennies on the dollar.
Tight-fisted Sycamore Partners‘ name has come up in Buybuy Baby conversations. The private equity giant has made a habit of talking and walking during its pursuit of Ted Baker and Victoria’s Secret when it wanted to shave down their asking price
Bed Bath & Beyond could hold some value even if someone wants to get rid of its expensive stores. That’s what happened with Linens ‘N Things, though that company is hardly a recipe for success.
A big-box rival to Bed Bath & Beyond, Linens ‘N Things liquidated stores after filing for Chapter 11 bankruptcy in May 2008 in the wake of private equity firm Apollo’s $1.3 billion leveraged buyout. It emerged from bankruptcy with a digital-only reboot, eventually selling to Galaxy Brand Holdings in December 2013 before shutting down in 2018.
The IP was picked up by Retail Ecommerce Ventures (REV), the holding company Alex Mehr and Tai Lopez founded in 2019 to buy distressed brands and revive them exclusively online. REV operates websites for Dressbarn, Modell’s Sporting Goods, Radio Shack, Stein Mart and Pier 1 Imports. Last month, however, it said it might have to file or bankruptcy. REV’s last deal came in September when it led a $32 million arrangement with Florida-based Ayon Capital for Tuesday Morning, the off-price home goods retailer that went bankrupt in March for the second time in as many years.
Even if REV is no longer in a position to buy, others could still step up to the plate. A report from CNBC in February suggested that brand management firm Authentic Brands Group could be interested in how the Bed Bath & Beyond brands complement the Thomasville, Henredon and Drexel Brands that make up its home furnishings portfolio. And many of Authentic’s fashion and apparel brands could be licensed in the soft home goods sector where the products could be Bed Bath & Beyond exclusives should the brand manager kick the tires again.
Meanwhile, Bed Bath & Beyond store closing sales start Wednesday. All sales are final, and purchases made prior to April 23, 2023 are eligible for returns and exchanges. The retailer will honor gift cards, gift certificates and loyalty certificates through May 8, 2023.
Inventory has long been a sore spot for Bed Bath & Beyond, though its heavily private-label stock seemed to be in decent shape through June 2022, according to DataWeave president and chief operating officer Krish Thyagarajan. June was when the retailer reported a dismal first quarter that likely spooked jittery vendors. At the time, S&P credit ratings described how the company burned through nearly $500 million in Q1 alone.
Even a changing of the guard with Sue Gove coming aboard as the new CEO did little to inspire support from suppliers concerned about getting paid for their shipments. Some vendors even stopped dispatching their goods to Bed Bath & Beyond as the holiday season approached.
Some believe it was only a matter of time before Bed Bath & Beyond filed for bankruptcy with one financial and operational misfire after another.
“Bed Bath & Beyond’s probable liquidation is due to the company’s ongoing weak operations and cash drain, which would have likely continued even with a lower interest burden after shedding debt in bankruptcy,” David Silverman, senior director at ratings firm Fitch Ratings, said. “The company’s limited chances for a turnaround have left it unable to find financing sources to support the company on an ongoing basis until sales and cash flow improve.”