Bed Bath & Beyond is anticipated to be dissolved after the failed retailer declared bankruptcy, but the corporate’s crown jewel — Buy Buy Baby — may live to see one other day.
The child gear retailer is drawing interest from not less than two bidders as its parent company, Bed Bath & Beyond, works to auction off its assets and keep some type of its business alive, CNBC has learned.
related investing news
The interested parties include an unknown bidder, who would purchase the banner as a going concern and keep about 75% of stores open, in line with correspondence obtained by CNBC. The opposite interested bidder is Babylist, a direct-to-consumer baby registry website that desires to purchase its trademark and domain, that company’s CEO, Natalie Gordon, confirmed to CNBC.
To date, it doesn’t appear as if there’s any interest in buying the Bed Bath banner and keeping its stores open, but some bidders are occupied with buying its digital assets, an individual conversant in the matter told CNBC.
It is not clear how much the unknown bidder is offering to buy Buy Buy Baby, however it was searching for a further $50 million in capital to shore up its proposal, in line with the correspondence. That figure offers the primary clue into how much bidders are willing to pay to snap up the pieces of Bed Bath’s fallen business.
The valuation of the corporate and its mental property is unclear. In its most up-to-date quarterly securities filing, Bed Bath noted the intangible value of trade names and trademarks was just $13.4 million.
As of late November, Bed Bath & Beyond had about $4.4 billion in assets and $5.2 billion in debts, court filings show.
Gordon declined to share the number Babylist offered for Buy Buy’s trademark and domain.
Who’re the bidders?
Ankura Capital Advisors, an investment banking firm, is advising the unnamed bidder and said in a May 16 email to its distribution list that the party is searching for a financial partner “to assist lead the acquisition of Buybuy Baby out of the BBBY bankruptcy.”
The client was searching for the extra $50 million in capital alongside its current financial sponsor to support a stalking horse bid on the asset, in line with the correspondence, which was seen by CNBC. A stalking horse bid is a suggestion on the assets of a bankrupt company that, if accepted, sets a price floor for future bids.
The mystery bidder, who was not named within the documents seen by CNBC, is an “independent operator with several successful, complimentary retail chains of their portfolio,” in line with the message.
“They’re open to numerous structures for the investment, from equity to preferred equity and other types of junior capital,” the message reads. “They’ve committed over 400 hours in extensive diligence already and have the team and experience to operate the stores as a going concern.”
In the e-mail, Ankura notes that Buy Buy Baby had about $90 million in inventory on the time of the bankruptcy filing and had been liquidating about $7.5 million weekly on the time the message was sent.
Babylist showroom floor
Courtesy: Babylist
Babylist bills itself as a destination for all things baby. It saw $290 million in revenue in 2022, says it’s profitable and counts over 1,000,000 recent parent sign-ups every year. The corporate said it considered putting in a bid to purchase the complete chain, including its stores, however it ultimately decided it didn’t fit into its overall strategic plan.
Babylist says it started off as a destination for the trendy parent who’s bored with the standard pink and blue landscapes but that it’s now working to expand its audience to all members of the proverbial village, including grandparents.
That is where Buy Buy Baby — and its long-held name recognition — would are available in.
If Babylist’s bid to accumulate the banner’s trademark and domain were to be accepted, individuals who seek for Buy Buy Baby and check out to access the web site could be redirected to Babylist, Gordon explained.
“We have now tremendous trust with recent and expecting parents but Buy Buy Baby is a lot better known with sort of that older generation,” she said. “In order we’re expanding to the entire family as an audience, we actually think it may well jumpstart us in that way.”
Gordon said the corporate opted out of putting in a suggestion for Buy Buy Baby’s registry assets due to how quickly they’ll turn out to be stale.
Plus, the corporate already appears to be taking share from Buy Buy Baby. Since Bed Bath’s bankruptcy was announced, Babylist has had nearly 200,000 recent sign-ups, which is a better number of latest customers than the corporate often sees in that time frame, it said.
Following the bankruptcy of Babies ‘R’ Us and the potential liquidation of Buy Buy Baby, there are few major retailers families can turn to that cater exclusively to the infant category. For registries, their options include Goal, Amazon and Babylist, amongst others.
Babylist doesn’t operate any traditional brick-and-mortar locations but plans to open its first showroom in Beverly Hills, California, this summer.
The crown jewel of Bed Bath & Beyond
This isn’t the primary time Buy Buy Baby has seen sale interest. The banner reportedly drew interest from potential buyers in 2022. It also caught the eye of activist investor Ryan Cohen, co-founder of Chewy and chair of GameStop, who last March pointed to the newborn gear banner as one among the most beneficial pieces of the corporate, arguing it may very well be price several billion dollars.
On the time, Cohen pushed for a by-product or sale.
Buy Buy Baby has remained a brilliant spot in Bed Bath & Beyond’s otherwise dismal earnings reports in recent times.
A Buy Buy Baby store within the Brooklyn borough of Latest York, US, on Monday, Feb. 6, 2023.
Stephanie Keith | Bloomberg | Getty Images
In Bed Bath’s fiscal 2021 holiday quarter, same-store sales for Bed Bath & Beyond stores declined 15% — but Buy Buy Baby’s same-store sales grew by low single digits.
And more recently, during Bed Bath’s fiscal third quarter of 2022, which ended Nov. 26, sales declines were reported across the corporate, but Buy Buy Baby’s revenue declines outperformed Bed Bath’s. Throughout the quarter, comparable sales on the Bed Bath banner declined 34%, while at Buy Buy Baby, they declined within the low 20% range, the corporate said on the time.
When Bed Bath & Beyond locations were shuttering across the country as a part of the corporate’s efforts to stop the financial bleeding, it opened more Buy Buy Baby locations within the hopes the stores would boost sales.
As of late April, 120 of the stores were still open, alongside 360 of Bed Bath’s namesake stores, the corporate said previously.
Auction delays
Bed Bath & Beyond’s bankruptcy auction has been delayed twice, which could indicate the corporate remains to be attempting to drum up interest for its assets.
Within the months before Bed Bath declared bankruptcy, CNBC reported the corporate was courting prospective buyers and lenders that might be willing to tackle the corporate and keep its doors open. On the time, the potential buyers included private equity firm Sycamore Partners, which was particularly occupied with Buy Buy Baby, and Authentic Brands, which has frequented many bankruptcy-run sales for retailers corresponding to Perpetually 21.
In the long run, the method proved unsuccessful and produced “limited interest in a viable proposal to accumulate the Debtors’ assets,” in line with court records filed in the corporate’s bankruptcy case in April.
Still, in those filings, the corporate said it was confident it could offload its names and stores and said it planned to market the business to avoid outright liquidation.
“While the commencement of a full chain wind-down is necessitated by economic realities, Bed Bath & Beyond has and can proceed to market their businesses as a going-concern, including the buybuy Baby business,” the corporate’s chief financial officer and chief restructuring officer Holly Etlin wrote in a declaration to Latest Jersey’s bankruptcy court on the time.
Within the filings, the corporate confirmed CNBC’s prior reporting and said greater than 100 potential investors had been engaged by Bed Bath’s advisors. Prospective bidders were asked in the event that they were occupied with buying the business as a going concern or providing Chapter 11 financing.
The corporate had been hoping a buyer could be willing to buy either Bed Bath & Beyond or Buy Buy Baby as standalone businesses, buy the brands’ mental property and maybe tackle just a few of their higher performing stores.
“Bed Bath & Beyond has pulled off long shot transactions several times within the last six months, so no one should think Bed Bath & Beyond won’t give you the chance to achieve this again. On the contrary, Bed Bath & Beyond and its professionals will make every effort to salvage all or a portion of operations for the good thing about all stakeholders,” Etlin added within the filings.
Further delays within the auction process could signal willingness on Bed Bath’s part to entertain the offer from the unknown bidder, provided the bidder can find more capital.
Ankura declined to comment on the matter. Bed Bath & Beyond didn’t reply to a request for comment.
Bed Bath previously told CNBC the auction had been delayed so it could have “more time to make sure probably the most value-maximizing transaction is achieved.”
Stalking horse bids at the moment are due on June 8 at 5 p.m., and final bids at the moment are due on June 14. An auction, if obligatory, is scheduled for June 16.
— CNBC’s Lillian Rizzo contributed to this report.
