Utah Giant Overstock.com Set to Acquire Assets of Bankrupt Retailer Bed, Bath & Beyond

After declaring Chapter 11 bankruptcy protections earlier this year, the once iconic U.S. retailer Bed Bath & Beyond has been dismantled in liquidation auctions, with Utah’s online heavyweight, Overstock.com, poised to purchase the company’s branding, intellectual property, and other assets.

The Acquisition

The deal, however, doesn’t include the physical brick-and-mortar stores. In a “stalking horse” bid of $21.5 million last week, Overstock has made a move that could lead to its acquisition of Bed, Bath & Beyond’s brand name, business data, and digital assets, pending approval by a New Jersey bankruptcy court next week. To understand more about a “stalking horse” bid, visit Investopedia. At its zenith, Bed Bath & Beyond boasted over 1,500 operational stores. As of early May, however, that number dwindled to roughly 350 locations. While Overstock.com declined to comment on the deal until it’s finalized, its shares have seen a significant increase, climbing over 17% by the close of regular trading on Thursday.

Buy Buy Baby Division

Since its stock reached a high of $81 per share in early 2014, Bed, Bath & Beyond has been on a downward trajectory, with its stock value falling to mere pennies per share in April this year.  While Overstock is focusing on how to maximize Bed, Bath & Beyond’s intangible assets, the latter is concurrently seeking to liquidate its Buy Buy Baby division through a separate avenue. This division, comprising approximately 120 stores, is deemed the most valuable residual asset of the company. The auction for Buy Buy Baby’s assets is set to take place next Wednesday, as reported by CNBC.

Workforce Reduction and Store Closures

In a bid to revitalize its business, Bed, Bath & Beyond announced a significant reduction of its workforce and store closures last August. Approximately 150 of its namesake stores were shut down, and its workforce was trimmed by 20%. The company’s previous strategy of promoting its own store labels was abandoned in favor of refocusing on national brands, marking a shift from the approach advocated by its former CEO, Mark Tritton. Tritton was ousted last June after less than three years at the helm.

Continued Store Closing Sales

Despite its winding down operations, Bed Bath & Beyond ensures its 360 stores and 120 buy Baby stores, along with its websites, will remain functional for customers to continue their shopping as store closing sales persist. The sales began on April 26.

Overstock’s Gain from the Auction

Overstock’s winning bid provides the e-commerce retailer with Bed Bath & Beyond’s intellectual property, business data, rights to mobile apps, certain contracts, and other related assets. However, it does not include its brick-and-mortar stores or Buy Buy Baby assets. In case the Overstock deal fails, software company Ten Twenty Four and Jowa Brands are named as the backup bidders for the retailer’s Beyond.com domain name and its private sheets and towels label, Wamsutta, respectively.

The Future of Bed, Bath & Beyond

Bed Bath & Beyond’s decision to file for bankruptcy in April came after numerous failed attempts to turn around declining sales and profits. The company, founded in 1971 and once celebrated as a retail powerhouse, has seen a steady erosion of its business over the years. As part of its restructuring efforts, the retailer has announced plans to shutter all Bed, Bath & Beyond, and Buy Buy Baby stores nationwide by June 30. Even with the closure of the physical stores, the Bed, Bath & Beyond brand will live on, thanks to the anticipated acquisition of its intellectual property by Overstock.com.

Bed, Bath & Beyond’s Final Days

Despite the company’s efforts to save the business, including a substantial stock buyback program and a failed shift from third-party products to store-branded goods, Bed Bath & Beyond’s current situation seems to indicate a potentially irretrievable business condition. In the wake of the company’s grim financial report issued in January, Bed Bath & Beyond’s current president and CEO, Sue Gove, acknowledged the company’s struggles to maintain adequate stock due to credit issues with vendors. While Gove held hope for a chance to salvage the business at that time, the imminent closure of the stores and ongoing liquidation of assets suggests a different outcome.

Conclusion

The forthcoming days will unfold what’s in store for both Overstock.com and Bed, Bath & Beyond. With the pending court approval for the deal and the looming auction of Buy Buy Baby’s assets, the retail landscape could be on the cusp of a significant change. As Bed Bath & Beyond’s physical presence diminishes, its legacy may live on in the digital realm through Overstock.com.