Bed Bath & Beyond in talks to sell assets

Troubled home furnishings retailer Bed Bath & Beyond is in talks with private equity firm Sycamore Partners to sell assets, including its Buy Buy Baby stores, as part of a possible bankruptcy process, people familiar with the matter said. The retailer is also in talks with other buyers about a possible deal.

According to the DealBook newsletter, Buy Buy Baby’s decline was not as dramatic as its parent company. Bed Bath & Beyond overextended and struggled to remain competitive, but Buy Buy Baby maintained a strong position in well-defined markets and its sales decline was less pronounced.

On Tuesday, the company said third-quarter sales at Buy Buy Baby were down 20% from a year earlier, but sales at Bed Bath & Beyond were down 34% over the same period. In 2020, the baby-and-kids store chain had about $1 billion in sales, according to an investor presentation.

Bed Bath & Beyond said this month that it was looking for new funding after a disappointing holiday season, including a block sale or an en bloc sale. Buy Buy Baby remains the retailer’s crown jewel, but it may be difficult to sell as a separate unit, as creditors may resist losing what is arguably the company’s most valuable entity. One way to solve the problem is for a potential buyer to buy out the entire company and close some Bed Bath & Beyond locations, one of the sources said.

However, discussions with all parties are continuing and no agreement may be reached. The people familiar with the matter spoke on condition of anonymity because the conversation is confidential.

A spokeswoman for Bed Bath & Beyond reiterated that “multiple avenues are being explored”. A spokesman for Sycamore declined to comment.

Sycamore understands the struggling retail market well. The company has acquired a string of retailers, including big box office purveyor Staples, Belk department store and women’s clothing chain Talbots. The founder of the private equity firm, Stefan Kaluzny, has many years of experience and relationships in the retail and consumer sectors. His interest in Bed Bath & Beyond could herald the kind of deal expected this year if traditional funding markets remain stagnant.

Shares of Bed Bath & Beyond have taken off after it issued a bankruptcy warning this month. In the shadow of the 2021 meme stock frenzy, its shares have more than tripled in the past five sessions.

As the company explores options, it is moving ahead with plans to close its 150 stores, announced in August as part of an aggressive restructuring plan. The retailer is trying to rebuild its inventory and once again stock its stores with more well-known brands — something it has dropped over the past few years.

But the process will take time, Bed Bath & Beyond CEO Su Geoff said on a conference call with analysts Tuesday. This week, the company began a new round of corporate layoffs, with Gove saying he would save an additional $80 million to $100 million. Shortly after the call ended, employees began receiving termination notices.

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