Buy Buy Baby, the subsidiary of struggling retailer Bed Bath & Beyond, may survive the company's bankruptcy as potential bidders show interest.
According to CNBC, at least two parties have shown interest in Buy Buy Baby as Bed Bath & Beyond prepares to auction off its assets.
Unknown bidder and Babylist in the running
One of the interested bidders is an unknown party that intends to purchase Buy Buy Baby as an ongoing business and keep approximately 75% of its stores operational, based on obtained correspondence.
Buy Buy Baby CEO Natalie Gordon confirmed that the other bidder is Babylist, a direct-to-consumer baby registry website. Babylist aims to acquire Buy Buy Baby's trademark and domain.
Uncertainty surrounds Bed Bath & Beyond's future
While there doesn't seem to be any interest in purchasing the Bed Bath banner and maintaining its stores, some bidders are interested in acquiring its digital assets, according to an insider.
The specific offer from the unknown bidder for Buy Buy Baby remains undisclosed, but they were seeking an additional $50m in capital to support their proposal.
Additional details
The value of Bed Bath & Beyond and its intellectual property is unclear, with the company reporting a trade name and trademark value of only $13.4m in its recent securities filing. According to court filings, Bed Bath & Beyond had $4.4bn in assets and $5.2bn in debts as of late November 2022.
Investment banking firm Ankura Capital Advisors is advising the unknown bidder, which is described as an independent operator with successful retail chains. The bidder is seeking a financial partner to lead the purchase of Buy Buy Baby out of Bed Bath & Beyond's bankruptcy.
Babylist, who had revenues of $290m in 2022, declined to bid for Buy Buy Baby's registry assets due to their short shelf life. Since Bed Bath's bankruptcy announcement, Babylist has gained nearly 200,000 new sign-ups, outperforming its usual customer acquisition rate.
Buy Buy Baby has shown resilience amid Bed Bath & Beyond's declining sales. While Bed Bath & Beyond experienced a 15% decline in same-store sales during fiscal year 2021's holiday quarter, Buy Buy Baby achieved low single-digit growth.
During Bed Bath's fiscal third quarter of 2022, the Bed Bath banner saw a 34% decline in comparable sales while Buy Buy Baby's revenue declines were in the low 20% range.
The bankruptcy auction for Bed Bath & Beyond has been postponed twice, indicating the company's efforts to generate interest in its assets. Previous potential buyers included private equity firms Sycamore Partners and Authentic Brands. However, no viable proposals were received.
Delays in the auction process may suggest Bed Bath & Beyond's willingness to consider the offer from the unknown bidder, given that they secure additional capital. Stalking horse bids are due on 8 June, with final bids scheduled for 14 June and an auction, if necessary, is set for 16 June.
